If a trustee signs a contract in the trustee's name, who is liable to the other party?

• A. The trust is liable; the trustee is not personally liable
• B. The trustee is personally liable; the trust is not liable
• C. Both are liable
• D. The contract is void

Answer: (B)

When a fiduciary signs a contract, who is liable depends on how the signer identifies the capacity in which they are acting. If the trustee signs using the trustee’s own name and does not indicate that they are acting in a fiduciary capacity for the trust, the contract is entered into by the individual, not by the trust. The other party can sue the trustee personally to enforce the contract, and the trust bears no obligation from that signature.

If the trustee instead signs in a way that clearly shows they are acting as trustee (for example, signing as “John Doe, Trustee for the ABC Trust” or signing the trust’s name), then the trust is the liable party and the trustee is not personally liable. In the scenario where the trustee signs in the trustee’s own name, the trustee is personally liable.