The contract was signed by a deputy but without authorization. Is the contract invalid?

“My company signed a contract with a partner in Vietnam. Later, we discovered that the signatory on the other side was the deputy director, but they didn't provide authorization from the director or legal representative. Will this contract be invalid?”

This is a fairly common situation in practice, especially when businesses sign contracts quickly or only check the title without thoroughly reviewing the signing authority. Many businesses believe that as long as the company seal and the signature of a manager are present, the contract is definitely valid. However, according to the 2015 Civil Code and the 2020 Enterprise Law, the person signing the contract needs to have appropriate representative authority or be duly authorized as stipulated.

This means that not every instance of a deputy signing a contract without authorization automatically renders the contract invalid. In fact, dispute resolution bodies will often consider many other factors such as:

• Did the company affix its seal and actually execute the contract?
• Have the parties delivered the goods, made the payment, or accepted the goods?
• Did the business know about and accept that transaction in practice?
• Does the signatory regularly represent the company in transactions?

For example, there are many cases where, even without a signed authorization document, the company still receives the goods, makes payments, or continues to fulfill the contract for an extended period. In such cases, the contract may still be considered valid in practice.

Conversely, disputes may arise because the signatory lacks the authority, and the business can prove that they never approved the transaction. This is why verifying the authorized representative, the authorization document, and the signing authority is crucial before signing any commercial transactions in Vietnam.

In reality, many contract disputes do not stem from the contract content itself, but rather from issues of representative authority and the internal signing procedures of the business.

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