Not another one…
You’ve just been passed yet another lengthy contract to read and sign. At this time you start to wonder, why is it so important to have contracts? Wouldn’t it save time and energy to just shake hands on it?
It may provide some relief to hear that a contract does not need to be written in order to be binding upon the parties. A contract made verbally is just as legitimate as one contained within a document.
Similarly, a contract does not need to be signed in order to be accepted. It is widely agreed through precedent that a contract can be accepted through conduct alone.
However, the following elements must be present for a contract to be legally binding:
- Offer – A promise in exchange for performance.
- Acceptance – When the person to whom an offer has been made agrees to be bound to the terms either by stating as such or implying acceptance through their conduct.
- Consideration- Each party must receive a benefit and suffer a detriment from the contract. This benefit or detriment is known as consideration.
- Intention- If it is clear that the parties wish to rely on the agreement in court, or they have not expressly stipulated otherwise, then intention is implied.
Why do we sign contracts?
A signature serves as confirmation that you agree to be bound by the terms of that contract and in the event of a dispute, a signed contract can prove invaluable.
Whilst a contract does not need to be in writing to be binding, and does not need to be signed to be effective, it is far easier to provide evidence of the 4 elements of the contract if it is in written form and signed by the parties.
The future of contract signatures
At TBOS we use a website called Signable which allows us to use electronic signatures to sign contracts. By using this online service, we can reach a number of parties instantly, and contracts can be signed from anywhere with an internet connection. This makes contract signing flexible for the parties and far easier when you do not have access to a printer. The main benefit is that documents signed through this portal are legally binding and as such can be relied upon in court.
Even with useful guides such as this, contracts can still be a minefield, not to mention taking up vast amounts of time to read in detail. At TBOS we can help as we now offer a contract review service. For a fee, our Contracts Manager can check either a contract received from your client, or a contract you intend to use to highlight any unfair or unusual terms, as well as highlighting inconsistencies with legislation. For further information and to discuss particular circumstances, our legal department is available on 0845 881 112 or by emailing [email protected].