On the subject of limiting liability to the LLC, I understand that contracts need to by signed by the LLC and not a person (i.e., it is signed by a member of the LLC on behalf of the LLC).
So, if I am writing a cost estimate (that will function as a contract), and and if I will sign it properly by the LLC, can I still use “I” in the letter? (My question is regarding ruining the legal liability protection, not grammar.)
Examples: “I am writing to provide the requested cost estimate…” or “I estimate the work can be completed by Sept 8…”.
– C.D., Colorado
It’s fairly common for an incorporated business such as a limited liability company or corporation to use pronouns such as “I” or “we” in contracts. As a note, a bid or estimate can be a binding contract if it meets the legal requirements of offer, acceptance, and consideration.
The primary risk with the language in a contract is not that you’ll inadvertently pierce the corporate veil, but rather that you personally will become a party to the contract when you intended for only the LLC to be a party.
Here are a few steps you can take:
1. The letterhead of the contract/bid should clearly state that it is XYZ, LLC entering into the contract, not John Smith.
2. The signature line needs to read something such as:
Its:_Member of XYZ, LLC__
3. If you want to be very careful, the first paragraph of your contract/bid can read something like:
This contract is made and entered into on this _________ (date), by and between XYZ, LLC, a Colorado limited liability company (“Us” or “We” or “Contractor”) and ________________, (“You” or “Customer”).
Then, make sure you consistently use the terms as you defined them above.
On the flip side, if you are dealing with a limited liability company, but you want to hold the owner’s personally accountable and not just the LLC, then you’ll need to either have them explicitly sign the agreement in their personal capacity or have them sign a separate personal guaranty document.