Board Resolution to Enter into Contract

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A board resolution to enter into a contract is a critical decision taken by board members of an organization. It involves approving and authorizing the signing of a legally binding agreement with another party. The decision-making process should be well-structured to ensure that the organization enters into a contract that aligns with its objectives.

The following are some key considerations that board members should take into account when making a board resolution to enter into a contract.

Legal Review

Before entering into any agreement, the board should seek the counsel of legal advisors and ensure that the proposed contract aligns with local and international laws. This is crucial in ensuring that the contract is legally binding and can be enforced if any disputes arise.

Financial Implications

Board members should also evaluate the financial implications of the proposed agreement. They should review the contract`s terms and conditions to ensure that they are favorable to the organization. The board should ensure that the financial benefits of the contract outweigh the costs involved.

Risk Assessment

The board should assess any potential risks that may arise from the contract. They should evaluate the potential risks and take appropriate precautions to mitigate them. This may include seeking insurance or including risk management clauses in the agreement.

Approval Process

The board should also define the approval process for entering into a contract. This should include establishing the threshold for accepting contracts and the number of board members required to approve the agreement. The approval process should be transparent and well-documented to ensure that all decisions are made in the best interest of the organization.


Clear communication is crucial when making a board resolution to enter into a contract. Board members need to ensure that all stakeholders are informed of the decision and the terms of the agreement. This includes shareholders, employees, and other parties affected by the contract.

In conclusion, a board resolution to enter into a contract is a critical decision that requires careful consideration. The board should review the legal and financial implications of the contract, assess any potential risks, define the approval process and communicate effectively with stakeholders. By following these guidelines, board members can make informed decisions that align with the organization`s objectives and protect its interests.

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