‘We’ve not signed your TOB’s, and the Ops Director isn’t authorised to agree contracts anyway!’

We often have debts referred to us where the debtor claims that there is no contract in place. In this case they also claimed that their Operations Manager didn’t have the authority to agree terms with the recruitment agency.

Our client in this case was an agency specialising in the construction sector. They had contacted the Operations Manager of a company specialising in deep excavations who were recruiting for a civil engineer.

The recruiter emailed through their terms of business, followed by relevant CV’s, and set up an interview with a candidate who was then employed. The recruiter issued an invoice for £5500 plus VAT. A fairly standard process with no hiccups, that is until it came to being paid.
The debtor emailed the recruiter stating they would pay £1000 now, and the remainder after the candidate had been in place for 12 weeks. The recruiter responded stating that the full invoice value was due. The debtor’sManaging Director thencalled the recruiter stating that they never pay recruitment fees up front because the candidates often leave.He then went on to claim there was no agreement in place as the TOB’s hadn’t been signed. After the call the recruiter contacted Sterling for advice. We explained that it is not necessary for the TOB’s to be signed, and pointed him to guidance on our website.

The recruiter responded to the debtor explaining the position and requesting payment. The debtor continued to insist that a signed contract was necessary, and then raised his second dispute, that the Operations Manager was not authorised to agree terms with service providers such as recruiter. The recruiter then referred the debt to Sterling.

We come across the ‘contract was not signed’ excuse regularly, and I’m still undecided as to whether debtors genuinely believe the excuse to be valid, or whether they are simply grasping at straws. Nevertheless, we have many years of experience in explaining law to debtors, so for us it is an easy dispute to set aside provide the recruiter has sent their TOB’s in the correct way (see our guidance on sending TOB’s here).

The ‘he didn’t have the authority’ excuse is less common, but equally it’s something that we are used to handling. UK law is very clear when it comes to ostensible, or apparent authority.Put simply, if an employee of a business portrays themselves in such a way that it would be reasonable for a 3rd party to assume that person has the authority to make commitments on behalf of the business, then that employee is deemed to have had the authority. It is the debtor’s responsibility to control their authorisation processes, and not the recruiter’s responsibility to check whether the manager has the relevant level of authorisation.

Sterling contacted the debtor and discussed the situation with them in detail, explaining the legal standpoint in relation to the evidence. After much deliberation the debtor took adv