A South Carolina court ruled that an agreement entered into by two church board members to pay a monthly stipend to the widow of a deceased pastor was unenforceable because the board members lacked the authority to enter into such an agreement. Jenkins v. Refuge Temple Church of God, 818 S.E.2d 13 (S.C. App. 2018). This feature article will review this ruling and more broadly address the key legal issues associated with signatures and signature authority. It is important for church leaders to be familiar with this information to avoid both the unenforceability of contracts and the potential personal liability for those who sign contractual agreements on behalf of a church.
Key point 4-06. Clergy who sign legal documents in their own name with no indication that they are signing in a representative capacity on behalf of their church may be personally liable on the document.
Key point 6-06.2.Officers and directors must be legally authorized to act on behalf of their church. Legal authority can be expressed, implied, inherent, or apparent. In addition, a church can ratify the unauthorized actions of its officers or directors, but this is not required.
Editor’s note: The numbers with each key point coincide with the numbered key points in Pastor, Church & Law, Fifth Edition (available on ChurchLawAndTaxStore.com, and the Legal Library on ChurchLawAndTax.com).
A church’s pastor founded the church in 1997. The pastor incorporated the church under state law by filing articles of incorporation with the secretary of state. The initial board adopted bylaws in 1997. The bylaws provide that congregation members would be nonvoting members and the board members would be voting members. The bylaws authorize the board to manage the affairs of the church, impose upon the board a fiduciary obligation to the church, and specify that the board will consist of no less than three members. The bylaws establish that a majority of the board shall constitute a quorum, and specify that the act of a majority of the board shall be the act of the board. The bylaws grant the pastor the authority to fill any vacancy in the board with the advice and consent of a majority of the present board. The bylaws allow the board to authorize any officer or agent of the church to enter into any contract or execute and deliver any instrument on behalf of the church.