Non-Signing Parties and Contract Enforceability: What You Need to Know
A contract not signed by one party may still be enforceable under certain conditions. Learn how non-signing parties, implied agreements, and legal doctrines impact contract validity. 5 min read updated on February 12, 2025
Key Takeaways:
- A contract is generally not enforceable if one party has not signed it, but exceptions exist depending on the actions, intent, and circumstances.
- Unsigned contracts may still be valid if evidence suggests both parties agreed to the terms (e.g., performance, partial payment, written communication).
- Non-signing parties and third-party obligations can affect contract enforceability and rights, especially in business agreements and mergers.
- Implied contracts and oral agreements may still hold legal weight under specific conditions.
- Legal doctrines such as estoppel and past dealings can impact the enforcement of an unsigned contract.
- It is always best to obtain signatures from all parties to ensure clarity and avoid legal disputes.
- UpCounsel provides access to experienced contract attorneys who can offer guidance on contract enforceability.
A contract not signed by one party makes it an agreement that isn't legally binding. Valid contracts need to have all required elements in it, and they are enforceable under federal and state laws. The two parts of a contract are the offer and acceptance. One party will make an offer and state what they're providing, while the other party will choose to accept the contract's terms, most often in writing. It can take time for acceptance to take place, as the negotiation process takes time until an agreement is reached.
The Basic Elements of a Valid Contract: Consideration
The subject of the agreement must be legal, and both parties must agree to the following:
- Be over the age of consent (usually 18 years old)
- Agree to the terms freely
- Possess the mental capacity to carry out the agreement
A contract that's valid needs to have an element of consideration, such as a value or price, that is exchanged. Consideration can include interest, right, or benefit and is not limited to money. Both parties need to somehow benefit from the contract. As an example, when a party sells their car to another person, the buyer gets the vehicle and the seller gets the money.
Consideration is when one of the parties gives something to the other party in exchange for something, no matter if it's big or small. This is what the promisor asks for and gets in exchange for the price of the promise. The promisor is the person who makes the promise, while the promise is the person the promise is made to. Consideration is something the promisor wouldn't otherwise get. However, it's not necessary to use the term consideration in an agreement. This should be thought of in terms of legal value compared to economic value.
Verbal agreements can be enforced, but they aren't normally valid until they're in writing. Those that have large amounts of debts or consideration, contracts that won't go into effect for a while, or real property should be written out.
The Role of Non-Signing Parties in Contract Enforcement
Non-signing parties may still have legal obligations or rights under a contract, depending on their involvement in the agreement. Courts may consider the following factors to determine whether an unsigned contract is enforceable:
- Performance of Obligations: If both parties act as though a contract exists, the court may find it binding even without a signature.
- Partial Payment or Acceptance of Benefits: When one party accepts goods, services, or payment under the terms of the agreement, it may indicate consent.
- Previous Dealings Between the Parties: If a history of verbal or unsigned agreements exists between the parties, a court may infer intent to be bound by the contract.
- Legal Doctrines such as Promissory Estoppel: If one party reasonably relied on the contract terms and suffered losses as a result, they may still enforce the agreement.
For businesses, understanding how non-signing parties impact contract validity is crucial to mitigating risks.
What Is the Difference Between Void and Voidable Contracts?
A contract is considered void when it cannot be enforced under federal or state laws. A contract that's void is null as soon as it's created, and none of the parties are bound by the terms. A contract can be void if:
- The terms aren't possible.
- One of the parties didn't have a sound mind when they signed it.
- The terms are against public policy or are illegal.
- One of the parties was under the age of consent.
- The rights of a party are constricted by the contract.
If someone is hired by an employer and the terms of employment have responsibilities that are illegal, the contract becomes void, since it does not stick to valid contract elements and is against the law. However, a voidable contract can be valid and enforceable in specific situations if both parties want to move forward with it. While one party is bound by the contract's terms, the other party can oppose it if there are legal reasons to do so. If the party who isn't bound rejects the terms of the contract, it then becomes voidable.
Can a Contract Be Enforceable Without One Party’s Signature?
While a contract missing one party's signature is generally unenforceable, exceptions do exist. Courts may recognize an unsigned contract as valid if:
- Both parties demonstrated intent to be bound (e.g., through actions such as fulfilling obligations).
- There is clear written communication (such as emails or correspondence) confirming agreement to the contract terms.
- State laws or industry practices allow unsigned contracts in certain situations (e.g., business dealings where parties have acted upon the agreement).
- An oral agreement supports the written contract, particularly if one party relied on the contract terms to their detriment.
However, some contracts must be signed to be legally binding, including real estate agreements, contracts covered by the Statute of Frauds, and high-value transactions.
Legal Risks of Proceeding Without a Signed Contract
Operating under an unsigned contract presents significant legal and financial risks, including:
- Uncertainty in enforceability: If a dispute arises, the lack of a signature may weaken a party’s legal standing.
- Challenges in proving intent: The burden falls on the party seeking enforcement to prove that both sides agreed to the contract.
- Limited recourse in case of breach: Without a signature, courts may not recognize certain claims for damages or enforcement.
- Complications with third parties: If a non-signing party disputes their involvement, proving contractual obligations becomes complex.
To minimize risks, businesses should always secure signatures before acting on contract terms.
Frequently Asked Questions
1. Can a contract be valid without both parties signing it?
Yes, a contract may still be enforceable if both parties acted upon it, there is a history of prior agreements, or written communications confirm consent.
2. What happens if one party refuses to sign after negotiating the terms?
If one party does not sign, the contract is usually not enforceable unless the other party can prove acceptance through actions or performance.
3. Are electronic signatures legally binding?
Yes, under laws like the U.S. E-SIGN Act and the Uniform Electronic Transactions Act (UETA), electronic signatures are as valid as handwritten ones.
4. How can I protect my business from unsigned contract disputes?
To avoid disputes, ensure contracts are signed before executing terms, keep detailed records of negotiations, and use email confirmations where necessary.
5. Can a non-signing party be held accountable under a contract?
In some cases, a non-signing party may be bound if they benefited from or relied on the contract, particularly under promissory estoppel or implied contract principles.
If you need help with a contract not signed by one party, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.