Question 5

Obtain a resolution of the board of directors authorizing the signing of the contract.

A broker should obtain a resolution from the board of directors as it provides the necessary authorization for the corporate representative to enter into the contract on behalf of the corporation.

A) Confirm that the corporation is in existence.

While confirming that the corporation is in existence is important, it does not provide the specific authorization needed for the individual signing the contract. Existence alone does not guarantee that the individual has the authority to act on behalf of the corporation.

B) Get a personal guarantee of performance from the principal.

Requesting a personal guarantee from the principal is not typically necessary when a corporation is involved. This option does not address the need for corporate authorization and could undermine the corporate structure by attaching personal liability to the principal.

C) Obtain a power of attorney from the office.

Obtaining a power of attorney is not the most appropriate step in this context. A resolution from the board of directors is more relevant as it specifically grants the authority needed to sign on behalf of the corporation, whereas a power of attorney may not be required if the corporate bylaws allow for signatory authority.

D) Obtain a resolution of the board of directors authorizing the signing of the contract.

This option is correct because a resolution from the board of directors provides explicit authorization for the individual to sign the contract, ensuring that the actions taken are in compliance with corporate governance and regulations.

Conclusion

The requirement for a resolution from the board of directors is essential when a corporation is involved in a contract to ensure proper authorization and compliance with corporate rules. Other options fail to provide the necessary formalities and protections that a corporate transaction demands, making option D the only viable choice.