Following 8 days of a much publicised Court trial Gordon Ramsay was recently held liable for rental obligations accrued under a personal guarantee given to his landlord to the sum of £1,280,000.
This would not be a remarkable finding if it were not for the fact that Mr Ramsay had not put physical pen to paper in signing the guarantee. Instead, the document had been signed with Mr Ramsay’s signature by his former business partner (and father-in-law) using an automated ghostwriter machine.
Under these circumstances Mr Ramsay sought to obtain a declaration from the Court that he was not bound by the personal guarantee because he had not signed it.
The Court decided that as there was significant historic evidence of previous use of the ghostwriter machine, the former business partner did have the authority to bind Mr Ramsay to the guarantee and the guarantee was therefore valid.
During the course of the hearing the Court deliberated on whether in the first instance the document had been validly executed as a deed. For this to be the case then under section 1 of the Law of Property Miscellaneous Provisions Act 1989, the document must be signed by the individual in the presence of a witness who attests to the signature or it is signed at his direction and in his presence and in the presence of two witnesses attesting to the signature.
It was agreed that a deed did not need to be executed by pen and as the ghostwriter machine used an original signature created by Mr Ramsay the Court held that it could be used by someone to validly execute a deed provided that permission had been given for its use.
From a property lawyers perspective the most startling issue to emerge from the Gordon Ramsay case is the magnitude of authority Mr Ramsay had given to his former business partner. The Court found that Mr Ramsay had effectively granted his former business partner implied actual authority which occurs when the signatory has express authority to do something but also performs matters which are necessary and incidental to that authority or does what is usual for him to do in similar circumstances or what has been done in a previous course of dealing.
Implied actual authority is problematic because although you may feel you have maintained some control over your affairs the signatory may act beyond the remit of his express authority under the belief that the authority extends to all similar dealings.
Worse still is ostensible or apparent authority which is present when an individual portrays himself as holding a position of authority to sign documents binding a company.
The clearest way to safeguard your interests is to provide actual authority by granting formal written powers of attorney limiting the scope of the signatory’s authority.
The Gordon Ramsay case is a reminder of the importance in providing clear written authorities to signatories where they sign legal documents particularly those that impose binding obligations.
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