Contract Under Seal Definition: What You Need to Know
The contract under seal definition describes the contract as one that is "formal" and one that does not require any consideration.3 min read
The contract under seal definition describes the contract as one that is "formal" and one that does not require any consideration. A contract under seal has the seal of the signer attached.
Overview of Contracts Under Seal
A contract under seal may also be referred to as a:
- Common-law specialty
- specialty contract
- Sealed contract
- Special contract
Contracts under seal must be in writing or in printed form on paper. These are conclusive documents between the parties once they have been signed, sealed, and delivered.
Delivery of the document is made in two ways.
- It can be delivered in person and physically handed to the other party.
- It can be stated that the document will be in operation even if it is retained and kept in the possession of the party executing it.
There is little similarity between a contract under seal and a standard contract. One that is under seal is a written set of promises deriving their validity from the form alone. Its only requirement is that it be signed, have a seal, and be delivered.
The presence of the word "seal" near the signature or printed form has been enough to create a contract under seal. Also, if the phrase "Locus Sigilli," which means "the place of the seal," or the abbreviation "L.S." appears on the document, this creates a contract under seal.
Contracts under seal usually carry an irrefutable presumption of consideration, which means one party can expect to receive the fulfillment of the obligations of the other party outlined in the contract without any argument.
In some courts, parties consider a sealed document as sufficient even if no seal is present.
Information About the Seal
Long ago, a seal, whether it was real or an imitation, attached to a promise meant there was a level of good consideration for that promise. This was true despite the fact that the person making the promise applied the seal.
In medieval times, a wax seal was used for authentication of a document. Today, the seal is usually seen as a stamped impression or it is embossed on paper -- such as a notary seal -- and serves as an authentication of a document or attest to a signature.
When compared to a wax seal, it is not absolute that the person signing the document had every intention that the sealed document would contain an enforceable promise.
Today, it is not expected that someone signing a contract will understand the obscure notations of the seal. Because of this, a major portion of U.S. states has removed the distinction between sealed/ unsealed instruments. The Uniform Commercial Code (UCC) also abolished the distinction when a contract deals with the sale of goods.
The remaining states that still have the distinction in place have, for the most part, modified it sufficiently to make the seal of little consequence. For these states, whether a contract is under seal can have implications.
First, a sealed contract is binding absent consideration, or it creates a rebuttable presumption of consideration. If under the law of the state a contract is in a situation where it may be deemed unenforceable due to lack of consideration, making it "under seal" will not necessarily correct the issue. This is true even if the law in place acknowledges a sealed and an unsealed distinction.
Seals may also be important when it comes to statutes of limitations. For example, in the District of Columbia, there is a 12-year statute of limitations for actions brought against an instrument under seal. Ordinary contracts have only a three-year statute.
In Georgia, a contract under seal has a 20-year statute of limitations. This means if someone defaults on a loan, the creditor would have 20 years to file suit for the debt.
Some states require certain documents to be under seal, such as a deed. Other states may have a longer or shorter period. In general, a contract signed under seal usually has a longer timeframe for statute of limitations versus an ordinary contract.
This brings into question the priorities of the person who drafts a contract under seal.
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