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A corporation president signs a seven-year supply contract on the corporation's behalf. The supplier had previously dealt with the president on small ordinary-course contracts, but before signing this contract the supplier received the corporation's purchasing policy stating that contracts over $500,000 require board approval. No board approval was given.
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A third party can never rely on an officer's title or prior dealings. The supplier may bind the corporation only if the president had actual authority or the corporation's manifestations created apparent authority, and known internal limits can defeat reasonable reliance. The contract is valid only if every shareholder separately approves it. A president always has inherent authority to bind the corporation to any contract, regardless of known board limits.

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