In business operations, contracts are essential legal instruments that establish and bind the rights and obligations of the parties. For a contract to be legally valid, the signatory must have full legal capacity and civil act capacity, and must sign within the proper scope of authority on behalf of the enterprise. As a general principle, the legal representative is the person authorized to act in the name of the enterprise in entering into and performing contractual transactions.

Depending on the organizational structure, an enterprise may have one or more legal representatives. Where there are multiple legal representatives, the company’s charter should clearly define the scope of rights and obligations of each individual. If the charter does not provide clear allocation of authority, each legal representative is deemed to have full authority when dealing with third parties and shall bear joint and several liability for any damage caused.

However, not all contracts may be executed unilaterally. Enterprise law establishes internal control mechanisms for certain specific transactions, particularly those involving managers or related parties, which require prior approval from the competent internal governing body before execution. In addition, a legal representative may lawfully authorize another individual within the enterprise to sign contracts on the enterprise’s behalf; nevertheless, such authorization does not exempt the legal representative from responsibility within the authorized scope.