The Coordinator Who Signed a Lease the Company Never Approved

The situation

The business had started small and stayed small on purpose. Shira's mother had incorporated it more than a decade earlier to provide personal support work to a handful of elderly clients around Collingwood — bathing, mobility help, medication reminders, the kind of care that lets people stay in their own homes. When her mother retired, Shira took over as the sole director and president, keeping the corporation but running it as a side business alongside her regular shifts as a personal support worker for a home care agency. Her partner Soo-jin, who worked full time as a security guard, helped with the books and scheduling in the evenings and was later added as a director too, though never as an officer with signing authority.

By the spring, the business had grown past what two people juggling day jobs could really manage. Word of mouth had brought in enough clients that annual revenue was approaching roughly $100,000, still modest, but real money for a company that had spent most of its life as a favour to neighbours. Shira hired a part-time coordinator, Eun-ji, to handle scheduling, intake calls and some ordering of consumable supplies. It was meant to be a limited, administrative role.

The problem

Eun-ji turned out to be ambitious for the business, which was not itself a bad thing. A supplier representative selling mobility and transfer equipment — hoists, lift chairs, bariatric bedding — pitched her on a bundled equipment lease that would let the company offer a broader range of services to clients with higher care needs. Eun-ji liked the pitch, believed it would help the business grow, and signed a five-year lease agreement on the spot, printing her title as "Operations Manager" under her signature. The equipment arrived within the week. So did the first invoice: monthly lease payments that, over the five-year term, added up to roughly $42,000, plus a maintenance and insurance surcharge on top.

Shira had never approved the purchase, never seen the agreement, and had not given Eun-ji the title she used or any authority to commit the company to a contract of that size. Under the Business Corporations Act (Ontario), a corporation is a separate legal entity, but it can only act through people, and not everyone connected to it can bind it to a contract. Directors and properly appointed officers generally have that authority, either because the corporation's bylaws or a board resolution gives it to them directly, or because the company has held them out to the world as having it. Employees below that level, including coordinators and administrators, ordinarily do not, unless the company's own conduct has led an outside party to reasonably believe otherwise.

That second part — what the law calls apparent or ostensible authority — was the real risk here. If the supplier could show the company had previously let Eun-ji place smaller orders, sign delivery slips, or otherwise act as though she had authority to commit company funds, a court might hold the company to the lease anyway, on the theory that the company's own behaviour created the impression of authority even if none was actually given. A five-year, roughly $42,000 obligation was not something a $100,000-revenue business carrying two other part-time incomes could safely absorb, especially with no client demand yet lined up for the equipment.

What we did

1. Pulled the corporation's minute book and confirmed who actually held authority. The company's articles and its one director resolution on file showed Shira as the sole officer and president with signing authority. There was no resolution appointing Eun-ji as an officer, no delegation of signing authority to her, and nothing in the corporate records supporting the title she had used.
2. Reviewed the company's actual course of dealing with the supplier and with other vendors. This mattered because apparent authority turns on the company's conduct, not just its paperwork. Eun-ji had ordered consumable supplies before, but always under a set dollar limit that Shira had verbally set and that suppliers' invoices reflected. She had never signed a lease, a financing agreement, or any contract obligating the company beyond a single order. That distinction — routine small purchases versus a five-year capital commitment — was central to the argument that no reasonable supplier should have assumed she could sign the lease without checking.
3. Sent formal written notice to the supplier disputing the validity of the lease. The notice set out plainly that Eun-ji held no actual authority to bind the company, that her conduct and title were not authorized or ratified by the company, and that the company was not accepting the equipment as its own. It asked the supplier to arrange collection and treat the agreement as void as against the corporation.
4. Confirmed the company had not ratified the contract by its later actions. Ratification is the trap that catches companies even after a rogue signature: if a corporation uses the goods, makes even one payment, or otherwise acts as though it accepts the deal, it can be found to have adopted the contract after the fact. Shira was advised, immediately on learning of the lease, to leave the equipment untouched, make no payments, and put nothing on client invoices connected to it, so there was no argument the company had accepted the benefit of the bargain.
5. Negotiated directly with the supplier once the position was clear. Suppliers who lease equipment generally want it back in good condition far more than they want a fight over an unenforceable contract with a small business. Once the supplier's own sales representative confirmed no purchase order or credit application had gone through the company's ordinary channels, the supplier agreed to collect the equipment and cancel the lease without penalty to the company.
6. Put a short signing-authority policy in place for the company going forward. A one-page written resolution set a clear dollar limit for Eun-ji's ordering authority, required any contract above that limit to be signed only by Shira as president, and required any new hire with purchasing responsibilities to sign an acknowledgment of that limit. It cost little to prepare and closed the exact gap that had allowed the lease to happen.

The outcome

The supplier collected the equipment within two weeks of the notice, cancelled the lease in full, and issued a written confirmation that the company owed nothing under it. No payment had ever been made, so there was no refund to chase and no invoice to dispute. The company avoided the roughly $42,000 lease obligation entirely, along with the ongoing maintenance and insurance charges that would have come with it.

Eun-ji stayed on in her coordinator role. Shira had a direct conversation with her about what had happened and why the title she had used on the lease was a problem regardless of her intentions, and the two agreed on the new written authority limits going forward. The business kept growing on its own terms, adding clients gradually instead of taking on equipment and services it had no signed contracts, and no client demand, to support.

The episode also prompted a broader look at the company's minute book, which had not been properly maintained since Shira's mother stepped back. Annual director resolutions, an up-to-date register of officers, and a written record of who could sign what were all things the business had been operating without for years, simply because nothing had gone wrong yet. Fixing that took an afternoon and meant the next supplier, landlord, or bank the company dealt with would find a corporation with clear, current, and easily provable authority on file.

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