In the recent case of Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 470 the Court of Appeal upheld the first instance judgement that the sole director and sole shareholder was contracting personally when he signed a letter containing not only his name but also the trading name of his limited company. Dr Hamid was the sole director and sole shareholder of Chad Furniture Store Ltd (“Chad”), which traded under the name of “Moon Furniture”. From time to time Dr Hamid conducted business personally and in 2003 he purchased some land in his own name which he wanted to redevelop into a showroom for his company.

Dr Hamid engaged the Francis Bradshaw Partnership (FBP) to provide engineering services for the redevelopment of the land. Further to a meeting and a telephone conversation, Dr Hamid summarised the terms of engagement and pricing in a letter to FBP. This letter was subject to close scrutiny by both the High Court and the Court of Appeal. The letter was written under the heading “Moon Furniture” and signed by Dr Hamid above his typed name, which in turn was above the name “Moon Furniture”.

FBP argued that that they were engaged by Chad and not Dr Hamid, in order to avoid paying damages for loss under the terms of engagement.

However, the High Court and the Court of Appeal ruled that there was nothing in the letter to indicate that Moon Furniture was a company and that Dr Hamid was signing it in his capacity as a director of that company. Furthermore FBP had no actual knowledge of the link between the trading name and the company which was owned by Dr Hamid, and the fact that they could have made that connection from the publicly available information was irrelevant. Jackson LJ took the same approach as Akenhead J in Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2565 (TCC) where he stated that “the court would take into account facts known to both parties, but not their private thoughts.” The court made the point that an agent will be treated as signing on his own behalf unless he makes it clear that he is signing for someone else.

When entering into contracts one must take care in identifying the contracting parties as well as establishing the capacity in which the individual is executing the document. In this case the ruling worked in Dr Hamid’s favour although one must be cautious not to assume unintentional personal liability when signing contracts. If you would like further informaton about capacity in relation to the signing of contractual documents, please speak to Toby Stroh, Head of Druces LLP’s Corporate & Commercial team.