Mark Pestronk
Mark Pestronk
Q: My small travel agency is called "Travel Trails." It is owned by a corporation named "JJM Inc.," of which I am the only stockholder. When a hotel sends me a group contract to sign, it usually states that, "This agreement is by and between ABC Hotel and Travel Trails." On the signature page, it usually states, "Travel Trails" and then I sign my name, "Jane Jones," underneath. Is this the right way to sign the contract? If not, what are my risks in doing so? Also, if the contract is with "ABC Hotel," is that the right way for a hotel to enter into a contract, and if not, how should the hotel correctly be identified?

A: The document you describe is not an enforceable contract. It is meaningless under the law, and it could create big problems for you.

A contract can be entered into only by an individual (called a sole proprietor or just a proprietor), a corporation, a limited liability company (LLC) or a partnership. In law, these are all called "legal persons" or "legal entities."

"Travel Trails" is not a legal person or legal entity. It is just a trade name or a "doing business as" name, which is usually abbreviated to "DBA." So it cannot enter into contracts.

You must use your corporation's full legal name at the beginning of the contract and above your signature. If you want to add your trade name, you can do so after your legal name, but adding it has no legal significance.

If you don't make your corporation a party, the hotel can -- and probably will -- sue you personally for any unpaid rooms. If you argued that you really meant to put the contract in your corporation's name, you would lose because there is no evidence of that.

Conversely, if the hotel breached the contract by refusing to honor your reservations, you would have a hard time enforcing it because a trade name has no legal rights. If you argued that either you or your corporation were really a party to the contract, you could have a hard time convincing any judge if the hotel opposed your position.

Ironically, the hotel has the same problems that you do. "ABC Hotel" is the name of a building. A building is not a legal entity, so it cannot be a party to a contract.

This analysis would not change if the hotel had a franchise company's name, such as "Key Bridge Marriott" or "Georgetown Hilton." Those are just buildings, too, and they cannot enter into contracts.

The only correct way for a hotel to enter into a contract is to use the full legal name of the hotel owner or operating company at the beginning of the contract and in the signature line. If the hotel fails to do so, I am not certain that you could successfully sue in case the hotel breached the contract. As with your corporation, the hotel can use its building name as a DBA after the legal name if it wants.

So a legally correct, mutually enforceable contract would state, "This agreement is by and between ABC Hotel Management Inc. DBA ABC Hotel and JJM Inc. DBA Travel Trails. As noted, the DBAs are optional."

The signature area should start with the legal names and then, at the left on the signature line, you should have "By" to signify that you are signing for your corporation and not for yourself.

If you have an LLC, the same rules apply; just change "Inc." to "LLC."
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