Entering into contracts with customers

From Vermont Virtual

Your vermont virtual company is a legal person. It can enter into contracts with customers or suppliers. We will provide a link to a bank that may be willing to open an account with the company.

Under the template operating agreement, active members have the right to vote (by a majority) to give a particular individual the right to enter into a contract on behalf of the company with a third party.

These delegations of authority should be explicit and should last for only a specified term.

In general, we recommend that the articles and operating agreement of a virtual company should provide that members do not otherwise have any authority to bind the company by contract.

Founders may bind the company during an initial period (e.g., by agreeing on behalf of the company that it will enter into an agreement with founders) if that authority is explicitly set forth in the articles and operating agreement. But once the founders have awarded rating points to other members (and, potentially, themselves) -- making them into "active members" under the terms of the template operating agreement -- an affirmative vote of a majority of active members is required to grant an individual or group the right to sign contracts on behalf of the virtual company.