In this particular case, the court ruled that since the
defendant signed the check as "John
Hancock, CFO, John Doe Company" instead of "John Hancock as CFO for
John Doe Company," he left himself exposed to personal liability.
Normally, in a case such as this, the burden would fall upon the claimant to
then prove that even though the CFO left out the crucial "as" and
"for" prepositions when signing the check, he had actually intended to make a
personal guarantee.Proving such a claim is generally quite
difficult. The claimant's case in this instance, however was helped by the fact that the
CFO skipped the court hearing. A default judgment was entered against him. He
lost on appeal and was ordered to cover the $45,000 check.
The primary lesson to be learned from this case (aside from never skipping a
court hearing) is that simply signing your name next to the name of the corporation may
not shield you from personal liability.
Local laws can vary as to the exact language
required, but as a general rule, your signature should clearly state that you are signing as
a representative for XYZ Company. This general rule of
course becomes critically important if the corporation is undergoing financial