Is a Contract Valid if Not Signed by Both Parties?
Is a contract valid if not signed by both parties? A written contract must be signed by both parties to be legally enforceable.3 min read
Updated July 21, 2020:
Is a contract valid if not signed by both parties? A written contract must be signed by both parties to be legally enforceable. However, some types of oral contracts are also valid and do not require signatures from either party.
What Is a Contract?
An agreement between two or more entities to do or not do something in exchange for an item of value constitutes a contract. The entities in question can be individuals, businesses, or government agencies.
A contract must:
- Include an agreement
- Involve parties who are competent to agree and do so freely
- Include consideration
- Have a lawful purpose
- Be in the legal form required for that specific type of contract
Agreement alone does not constitute a contract. An agreement is an offer made by one party that is accepted by another party. If either offer or acceptance is not present, the agreement does not exist.
If acceptance is mailed, the contract is valid as soon as this step has been taken, not when the mailed acceptance is received. This is called the mailbox rule. However, the person who makes the offer can stipulate that it is not accepted until it is received. The mailbox rule is also not in effect if payment must accompany the offer acceptance.
What Is an Offer?
An offer must include the intent to create a legal obligation, such as when one party sends a signed written contract to another party for his or her agreement. If an offer is made without intent, such as in a joking manner, the offer does not exist.
Price quotes and advertisements that include price quotes are considered invitations to negotiate, not offers since they cannot be contractually binding. Every person who sees the offer cannot possibly accept since the supplies being advertised are limited.
An offer does not have to be in writing, but it must be communicated to the other party in some way. An offer does not exist if the other party only hears about it indirectly.
How Can an Offer Be Terminated?
If the offer is withdrawn or terminated, no contract can exist. An offer can be terminated at any time if:
- The person making the offer communicates intent to revoke it to the offeree.
- The offeree makes a counter-offer, which is a new set of terms and conditions that voids the original offer.
- The offeree rejects the offer.
- Too much time passes.
- Either party dies or becomes disabled.
- The performance of the contract becomes illegal.
Until the person who made the offer communicates that it is revoked, it can still be accepted by the other party.
What Is Competency?
Everyone is legally considered to be competent to enter a contract, but if a person is later found to lack capacity, the contract can be voided unless the person in question chooses not to do so. Competency means that the party can understand the content of the contract and the terms to which he or she is agreeing. A minor is not considered competent to sign a contract but can opt to do so with the ability to void the contract before he or she turns 18.
What Is the Difference Between Void and Voidable Contracts?
A valid contract is one that meets the stipulations and requirements described above. A voidable agreement is one that would normally be legally valid except that one party lacks capacity or it otherwise lacks one of the required elements. However, this contract is not necessarily void unless one of the parties wants to void it. If the contract is voidable the parties can opt whether or not to be bound by the agreement. A void agreement cannot be enforced in court at all, such as a contract that requires the performance of an illegal act.
What Is an Executory Contract?
An executory contract means that the contract terms have not yet been satisfied by one or both parties. This contract is enforceable but is not yet considered executed. An executed contract is one that is fully complete. For example, if you enter a contract to buy furniture and have paid for the furniture, the contract is executory. Once the furniture is delivered, the contract is executed.
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