Who Can Commit the Company? Authority and Accountability in Cross-Border Operations

A regional sales director agrees to a customer’s requested delivery date. An overseas subsidiary accepts a restriction on access to customer information. A distributor tells a prospective buyer that the manufacturer will honor an extended warranty. Each statement may appear to be an ordinary step toward closing business. Each also raises a question that should be resolved before the commitment is made: who has authority to bind which entity, and on what terms? In cross-border operations, the answer can become obscured by shared branding, overlapping management roles, and informal approvals across time zones. The resulting exposure extends beyond a disputed signature. A company may face obligations that its operating teams cannot perform, concessions that were never reflected in pricing, or disagreements over which group entity must bear the cost. Effective delegation begins by connecting commercial authority to the legal entity assuming the obligation and the people responsible for fulfilling it.

Consider a hypothetical European software group whose U.S. subsidiary negotiates an enterprise subscription with a California customer. The regional director has internal approval to conclude standard subscriptions below a specified value. During negotiations, however, the customer requests domestic-only support access, an accelerated security-incident notification period, and reimbursement of certain transition expenses if implementation fails. The director accepts these terms by email and forwards the agreement for signature as an approved transaction. The subscription price falls within the director’s financial limit, but the additional commitments affect overseas engineering, security operations, and potential liability. The internal question is whether the director exceeded the delegated mandate. The external question is whether the customer can nevertheless enforce the commitments against the relevant entity. These inquiries may produce different answers. A sound review would examine the communications, the scope of the delegation, the company’s conduct toward the customer, the agreement’s formation and execution requirements, and the law applicable to the particular issue.

California agency law illustrates why an internal authorization policy does not, by itself, settle the external question. Civil Code section 2316 addresses actual authority, including authority intentionally conferred and authority the principal allows the agent to believe they possess through a lack of ordinary care. Section 2317 addresses ostensible authority: the authority the principal causes or allows a third party to believe the agent possesses. The inquiry therefore extends to the company’s own conduct, rather than turning solely on an employee’s assertion of power. Section 2334 further limits when a principal is bound on the basis of ostensible authority, requiring the third party to have acted in good faith and without a lack of ordinary care, and to have incurred liability or parted with value in reliance on that authority. In practice, prior transactions, management communications, and the handling of approvals may all warrant examination. A private restriction that is inconsistently observed deserves particular scrutiny. California Civil Code §§ 2316–2317; § 2334

Formal execution introduces a further consideration. Where applicable, California Corporations Code section 313 protects certain written instruments signed by officers from each of two specified groups: the board chair, president, or a vice president, together with the secretary, an assistant secretary, chief financial officer, or an assistant treasurer. Subject to section 208(a), the instrument is not invalidated by the signing officers’ lack of authority unless the other party actually knew that they lacked authority. This provision should not be reduced to a general instruction that every contract requires two signatures, nor should it be assumed to govern every foreign entity or organizational form. Its relevance depends on the entity, transaction, and applicable law. For management, the point is more immediate: execution formalities can have consequences distinct from compliance with an internal approval process. Signature routing should therefore reflect the company’s legal structure and governing documents, with counsel addressing statutory applicability where necessary. California Corporations Code § 313

The delegation framework should distinguish authority to negotiate, approval of the commercial and legal substance, and authority to execute the final instrument. These functions may be assigned to the same person in routine transactions, but the assignment should be deliberate. A monetary ceiling alone is an incomplete measure of exposure. A modest subscription may contain broad indemnification, exclusivity, intellectual-property concessions, or operational commitments that materially exceed the revenue at stake. An approval framework should therefore address both transaction value and the nature of the obligation. Standard terms can move through a relatively simple process; specified departures should require review by the functions equipped to assess them. The regional team should know, before negotiations begin, which concessions it can make, which require additional approval, and which fall outside the approved business model. That clarity also improves negotiations: the person dealing with the customer can explain the available options without repeatedly retreating from commitments already communicated.

Cross-border groups need an additional layer of precision because the person directing an activity, the entity signing the contract, and the team performing the work may be different. Approval from a parent-company executive should be documented in a way that establishes the capacity in which the executive acts and the entity for which approval is given. Transaction documents should identify the contracting party consistently, including in order forms, statements of work, amendments, and signature blocks. Where performance depends on another group company, the contracting entity should have an agreed means of obtaining that performance. In the software example, approval of domestic-only support access would require confirmation from the team controlling access permissions and support coverage. The commercial approver should receive that confirmation before accepting the restriction. A general assurance that “headquarters will support the deal” leaves unresolved the resources, responsibilities, and service arrangements on which performance depends.

Authority also needs to be managed in communications surrounding the final agreement. Proposals, procurement questionnaires, implementation correspondence, and renewal discussions can contain statements that deserve contractual review, particularly when incorporated into transaction documents or relied on during negotiations. Their legal effect depends on the wording, context, applicable law, and the agreement as a whole; an operational policy should avoid assuming that only a signature can matter. As a practical measure, technical personnel should be able to confirm product capabilities without inadvertently accepting a new warranty, while sales personnel should distinguish an approved commitment from a request still under review. Material conditions should be communicated accurately and consistently to the counterparty. A statement that terms remain subject to specified approval is most useful when the company’s subsequent conduct follows that process. Internally, approval should identify the actual document version, including relevant schedules and attachments, so that a late revision does not escape the review on which signature authorization depends.

When an unauthorized commitment is discovered, the company’s subsequent conduct requires attention. California Civil Code section 2307 recognizes subsequent ratification as a means of conferring authority. Section 2310 addresses the required manner of ratification and, where oral authorization would suffice, permits ratification through acceptance or retention of the act’s benefit with notice. The response should therefore be considered promptly with counsel, particularly before further performance or retention of benefits. Management should establish what was promised, who knew of it, what the counterparty has done in response, and whether the transaction has begun to perform. Simply recording an internal policy breach does not resolve the external consequences. The immediate objective is to reach an informed position on the commitment while preserving relevant communications and avoiding further inconsistent representations. California Civil Code §§ 2307 and 2310

The approval record should make the decision understandable after the people involved have moved on. It should identify the legal entity, the approved document version, material departures from standard terms, the responsible approvers, and any conditions that must be satisfied before execution or performance. For an exception, a short explanation of the commercial rationale and the means of managing the exposure is usually more useful than a bare approval email. The process also needs to work under ordinary business pressure. Companies should designate alternates, establish realistic response times across time zones, and provide a defined route for urgent decisions. Repeated exceptions should prompt a review of whether standard terms or operating capabilities need to change. Changes in personnel, responsibilities, or corporate structure should likewise trigger updates to delegations and execution access, with external communications considered where counterparties have previously dealt with the affected representative.

A focused authority review can begin with a small sample of recent transactions: one concluded on standard terms, one involving a material exception, and one negotiated across group entities. Following each from the initial proposal through approval, signature, and delivery reveals where the written policy diverges from actual practice. The resulting work should produce a delegation schedule tied to specific entities and obligations, an exception process that business teams can use, and a reliable link between approval and the document ultimately executed. Management should then be able to determine who may make a commitment, which facts must be verified before approval, and who owns performance afterward. That is the practical foundation for giving local teams meaningful commercial discretion while maintaining informed control over the obligations the business accepts.

For businesses reviewing cross-border decision-making, a useful starting point is the transaction approval process: where authority sits, how exceptions are handled, and whether the entity accepting an obligation can secure its performance. Contact Meridian Strategy Partners to discuss the scope of an operational governance review.

This article provides general information and uses California law to illustrate selected issues. It is not legal advice or a comprehensive statement of the law. Authority, contract enforceability, and corporate formalities require assessment under the laws and facts applicable to the relevant entity and transaction.