1. Who Has Authority to Approve Corporate Transactions?
The person who negotiated a deal may lack authority to approve it. Routine purchases, asset sales, and conflicted deals can require different approvals. Start with the formation state, entity type, governing documents, and transaction scope.
Separate Board, Officer, and Shareholder Powers
Corporations Code § 300 places corporate management under the board's direction, subject to statutory limits. Officers act through delegated or other applicable authority. Under § 1001, a sale of all or substantially all assets outside the ordinary course generally requires board approval and shareholder consent, subject to statutory exceptions.
| Decision | Records to Check |
|---|---|
| Routine commercial agreement | Officer authority and delegated limits |
| Major asset disposition | Board approval and applicable shareholder vote |
| Interested-director transaction | Disclosures, approval process, and fairness |
Routine commercial agreement
- Records to CheckOfficer authority and delegated limits
Major asset disposition
- Records to CheckBoard approval and applicable shareholder vote
Interested-director transaction
- Records to CheckDisclosures, approval process, and fairness
Corporations Code § 310 provides conditions under which an interested-director deal is not void or voidable solely because of the conflict. Compare disclosure, approval, and fairness with corporate governance records.
Check LLC Management and Member Consent
Corporations Code § 17704.07 distinguishes member-managed from manager-managed LLCs. Managers ordinarily direct manager-managed companies, but disposing of substantially all assets outside ordinary operations generally requires all members' consent. Check statutory exceptions and operating-agreement terms.
- Confirm how the articles identify the management structure.
- Read the operating agreement's voting and authority provisions.
- Verify member consent for extraordinary transactions when required.
Retain votes and written consents. The management title alone may not settle authority for a major deal.
2. Which Contract Terms Should Businesses Review before Signing?
Approval settles only one set of questions. A signed agreement may still leave payment triggers, deliverables, or exit rights uncertain. Read the operative terms against the transaction schedule and the business's actual obligations.
Confirm Parties, Authority, and Payment Duties
Confirm each entity's exact name, signer capacity, deliverables, and payment milestones. An internal authorization defect and a counterparty's right to enforce the agreement are separate questions. Actual or apparent authority may matter.
- Match the signer to resolutions and delegated authority.
- Specify deliverables, acceptance standards, and invoice deadlines.
- Document conditions that must be satisfied before closing.
Disagreements often begin with a term each side understood differently. Contract drafting and review can clarify those obligations before signature.
Allocate Liability and Plan for Contract Failure
Indemnities, warranties, liability caps, and termination clauses allocate different risks. Civil Code § 3300 generally measures contract damages by loss caused by the breach, subject to applicable limits and other governing rules.
| Clause | Question before Signing |
|---|---|
| Indemnity and liability cap | Which losses and exceptions fall within each provision? |
| Termination and cure | What notice or opportunity to fix a breach is required? |
| Dispute resolution | Which law, forum, and procedure govern a dispute? |
Indemnity and liability cap
- Question before SigningWhich losses and exceptions fall within each provision?
Termination and cure
- Question before SigningWhat notice or opportunity to fix a breach is required?
Dispute resolution
- Question before SigningWhich law, forum, and procedure govern a dispute?
Compare exceptions against the liability cap and insurance provisions. An unfavorable clause may remain enforceable.
3. What Filing and Dispute Rules Affect Business Transactions?
A board resolution does not replace a required business filing. State entity records, municipal tax registration, and court rules address separate legal questions. Location matters for city registration, not for creating a different corporate approval statute.
Distinguish State Filings from City Registration
The Secretary of State accepts Statements of Information through bizfile Online. Domestic stock corporations generally file annually and LLCs biennially after their initial statements. Late filings may trigger penalties; prolonged noncompliance can affect entity standing.
- Check the entity's status and current registered agent.
- Confirm its Statement of Information filing schedule.
- Determine whether city business activity requires tax registration.
Businesses operating within Los Angeles city limits generally need an Office of Finance Business Tax Registration Certificate, subject to exemptions. A county mailing address alone does not establish city jurisdiction. Keep corporate compliance filings current.
Prepare for Approval or Performance Disputes
If a deal breaks down, compare the executed agreement with amendments, approvals, and performance notices. A contract claim may proceed in Superior Court when jurisdiction and venue are proper. Federal court requires an independent jurisdictional basis.
- Check notice, cure, and dispute resolution clauses first.
- Preserve transaction approvals and later correspondence.
- Review court filing, service, and applicable e-filing rules.
Los Angeles Superior Court generally requires represented parties to e-file civil documents, subject to exceptions. Approval defects, contract breaches, and filing lapses call for distinct analyses.
4. Frequently Asked Questions
Can an officer's unauthorized signature bind the company?
Possibly. Actual or apparent authority, statutory protections, and the other party's knowledge may matter. A missing internal approval does not itself determine enforceability.
Must every corporate agreement be written?
No. Oral agreements can be enforceable, while Civil Code § 1624 requires a writing for specified transactions. Written terms also help establish what the parties agreed.
Can an out-of-state corporation sign contracts before registering locally?
An isolated contract does not necessarily constitute transacting intrastate business. Activities and statutory exceptions determine whether a foreign corporation must qualify.
Does an LLC operating agreement override every statutory voting rule?
No. Section 17701.10 permits changes to many default terms but limits the operating agreement's ability to alter specified legal duties and rights.
5. Review Corporate Agreements with SJKP Attorneys
A deal may be ready for signature while its approval record remains incomplete. Check the signature, required votes, and material terms before closing.
SJKP's attorneys can examine governance documents, approval records, contract terms, and applicable filings. Contact the firm to discuss questions arising from a proposed transaction.
20 Oct, 2026
