Read time: 2 minutes
When approached to undertake a commission, one of the first questions you should ask is: is my client a 'legal person'? A legal person is an entity that can sue and be sued. The most common forms of a legal person are:
- a natural person (individual)
- a company (public Limited or ‘Ltd’ and private ‘Pty Ltd’).
An incorporated association is also a legal entity.
Whilst a partnership is not a legal person in its own right, it is made up of legal persons (the partners) and is bound by commitments made by any one of them, who therefore can sue and be sued in respect of the affairs of the partnership.
A trust is also not a legal person. The proper contracting party is the trustee of the trust (who may be an individual or a company).
Difficulties will arise in enforcing a contract against a client that is an unincorporated body (such as an unincorporated club), or is a company which is yet to be registered (ie, yet to come into existence).
An unincorporated body has no existence apart from that of its members. If you purport to contract with such a body, no effective contractual obligation arises, so there is likely to be no-one you can sue for your fees (but you could still be held liable if you are negligent in providing services under the contract). The people you should contract with for services and the payment of fees are those, such as the trustees (if any), who hold property on behalf of those bodies.
Sometimes, the promoters of a company commence business before registration of the company. Contracts purporting to be made by a company prior to its registration may be invalid. However, a contract made on behalf of a yet-to-be registered company (for example, by its promoters) will be effective against the company if the company ratifies the contract within an agreed or reasonable time after the company’s registration. If the company is not registered, or the contract is not ratified after registration within the relevant timeframe, the promoters who signed the contract on behalf of the company will be liable to compensate the other parties to the contract for any resulting loss.
When in doubt about your client's legal capacity to enter into a contract with you (including an agreement to pay your fees), seek your solicitor's advice before trouble arises.
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.