Who can sign your contracts?
Who has authority to enter into a contract? And who needs to approve it?
In a business's early days, these two questions will have the same answer: the founder, or founders.
It doesn't take much growth for the answers to become less clear cut, or even inconsistent when asking different people in your business. Nobody sets out to let that happen. You just grow past the answer you had.
Sometimes that shows up as everyone signing and nobody checking. Just as often it's the opposite: every contract still routed to a founder, with a queue forming behind them. Either way you end up with contracts nobody remembers agreeing to, contracts nobody can find, and no consistency in the terms you're accepting.
Authority and approval aren't the same thing
These often get treated as one question, but they work differently.
- Authority is about binding the company. Can this person put the company on the hook? That's a legal question.
- Approval is about permission. Was this person allowed to commit that money or accept that risk? That's an internal question.
Authority: the part the law decides
Authority isn't yours to set. Australian law decides it.
The formal position is straightforward. A company signs through two directors, a director and the company secretary, or its sole director if it has one. Sign that way and the counterparty gets the strongest possible comfort that the contract binds you. Use it for anything material.
To avoid a bottleneck at director level, most contracts don't get signed that way. They get signed by whoever runs the relationship, and authority gets assumed from the pattern of behaviour. If your sales lead has signed four order forms and nobody said a word, you've created an argument that she can sign the fifth. The counterparty doesn't have to ask what your internal rules say, and they won't. Once it's signed, those rules aren't a defence.
So your internal process won't unwind a contract someone signs. What it can do is ensure the right people review and approve terms before signature, so what gets signed reflects the commercial terms you agreed and the risk your company is actually willing to take.
Approval: the part you decide
The good news is that you get to set your own approval rules, also called delegations.
Where to set the limits
There's no standard answer, but there is a useful starting shape. Work out the biggest commitment you'd be comfortable finding out about after the fact, and set your first threshold below it. Everything under that line gets signed by the person who owns the relationship. Everything over it comes to you.
Then add the things that come to you regardless of price:
- Anything you can't get out of. A twelve month lock-in at $500 a month is a bigger commitment than a one-off $8,000 invoice.
- Anything that gives something away. IP ownership, exclusivity, an uncapped indemnity, rights over your customer data.
- Anything that sets a precedent. The first contract with a new type of customer, or the first time you agree to someone else's terms instead of your own.
Revisit the whole thing when something structural changes: you've signed your first enterprise customer, you've set up an entity somewhere new, or you've hired people used to very different limits at their last company.
The four things you actually need
The test to see if your delegations are working: does a control stop a decision, or route it? Routing is what you want. It puts the call in front of whoever has the context, at the point it still matters.
Four things do that job.
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A one-page delegation schedule. Who can commit what, up to what value, signed off by whom. Set the limits high enough that everyday spend never reaches a founder.
What that looks like: your marketing lead wants a $200 a month analytics tool. The schedule says she can commit up to $2,000 a month, so she signs it herself. No founder involved, and no four day wait for an answer that was always going to be yes.
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A signing rule. One sentence on who signs for the company. Send it round. Repeat it when people join.
What that looks like: "Anything over $5,000, or on the always-check list, comes to a founder. Everything else, the schedule says who." Your sales lead gets handed an order form to sign on a call. She knows the rule, so she says she'll come back to them rather than signing on the spot to close the quarter.
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A contract list. A spreadsheet is completely fine. Who it's with, what it covers, value, term, renewal date, notice period, who owns the relationship.
What that looks like: a tool you stopped using in March needs 45 days' notice before it renews in September, and someone sees it coming. When a buyer asks for your key contracts, you send the list that afternoon instead of spending two weeks on a scavenger hunt.
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A review trigger. A dollar figure above which someone senior takes a look, plus a few terms that always get a look no matter the value: indemnities, liability caps, exclusivity, IP ownership, anything about data.
What that looks like: a $4,000 contractor agreement sits under every limit you've set, but it doesn't assign IP to you. The trigger catches it because of what it says, not what it costs.
So, who can sign your contracts? Legally, more people than you'd like. Practically, whoever you've let sign them so far.
If that answer makes you uncomfortable, start here: list every contract you can find, note the renewal dates, and write one sentence about who can sign what. An afternoon, once.
Now, the sell
A delegation schedule only works if people follow it. The honest problem with one that lives in a document is that nobody opens it at the moment they're about to sign something.
That's what nicholii does. Contract creation, negotiation, approvals and a single repository in one place, with your delegation schedule built into the approval flow. Low value, low risk agreements move without a detour through legal. The things that need real judgement get routed to the people who should see them.
We take care of the bread and butter, so the contracts that actually need you are the only ones that reach you.
This is general information, not legal advice.
