Canceling a vendor's contract

December 17, 2004

Two years ago, unbeknownst to me, my office manager signed a five-year contract with a waste management company. Because the company hasn't lived up to its promises, I canceled the contract. Subsequently, the company charged me a $1,500 early termination fee. I contend that since my office manager is not an officer of my professional corporation, she wasn't empowered to bind me to the contract. Am I right?

Q. Two years ago, unbeknownst to me, my office manager signed a five-year contract with a waste management company. Because the company hasn't lived up to its promises, I canceled the contract. Subsequently, the company charged me a $1,500 early termination fee.

I contend that since my office manager is not an officer of my professional corporation, she wasn't empowered to bind me to the contract. Am I right?

A. No. You've been using the service for two years-which the courts would view as making the contract valid. Instead, check for provisions in the agreement that let you out for unsatisfactory service. Or contact the company's management and demand improved performance. Finally, set limits on what your office manager can do without your approval.