What Is Legally Binding?

Legally binding documents require both parties' signatures. A legally binding document is an agreement that has been made between two parties where specific actions are prohibited or required on behalf of one or both of the parties. 

For example, an apartment lease is a legally binding contract, as the lessee and lessor agree to a certain number of conditions when they sign this document. The lessor often agrees to give the apartment for a specific length of time in a certain condition, while the lessee agrees to pay a set amount for rent each month and not participate in any behaviors that are destructive.

What Makes a Document Legally Binding?

A legally binding document can be upheld in court. Any agreement that two parties make can be legally enforced, whether it's written or verbal. A signed document is important because it provides proof that an agreement exists and shows both parties agreed to identical terms. 

If there isn't a document, it's hard to say what conditions the parties agreed on, as each of them may have a different opinion or recollection of the verbal agreement. A signed document is considered a legal contract.

How to Make a Legally Binding Document

When both parties acknowledge and agree to the contract terms, the following happens:

  • Their signature is proof they accepted the contract 
  • The signature binds both parties to the terms
  • Getting the contract notarized proves each party signed the document (since no one can claim their signature was forged)
  • The document has the notary's mark and seal

The Key Elements of Legally Binding Documents

There are three main elements all legally binding documents should include: 

  • Subject: The agreement includes the offer in specific, unambiguous terms
  • Consideration: The contract's motivation, such as monetary exchange or confidential information protection.

Capacity: All parties signing the contract must have the legal age, sound mind, and authority to do so.

  • Keep in mind that just because a document is legally binding, it doesn’t mean it cannot be voided. Contractual parties can require a contract to be voided if they bring evidence that one of the three main elements was not met when they signed the contract. 

A document that's notarized is a secure way to sign a contract, but the document will still be legally binding and upheld in court without being notarized. It's important to be careful how you word the document, as you'll need to include all essential terms. 

If you forget to include an item in the document, it doesn't exist in the agreement. The wording clarifies what each party is legally bound to do, so if a contract is poorly worded, it can lead to misinterpretation. The contract will still be legally binding, but the judge can interpret the words on their own terms.

What Is a Notary Public

A notary public is basically someone from the secretary of state who acts as an impartial witness for the public in a range of official fraud-deterrence situations. You can find a notary in your local town. They are involved in the notarization/ signing of important documents (also called notary acts.) Notarizing documents ensures you understand the information on the proposals before signing.

If you cannot look for a notary, a lawyer can act as an impartial witness too. However, lawyers will not read the document's contents – they will only verify the validity of both parties' agreements. 

The Agreement Component of a Contract

The agreement part of a contract includes counteroffers, offers, and a meeting of the minds. If you take a taxi to the airport, you're verbally agreeing that you'll pay a certain amount when you get to your final destination. 

However, certain contracts must include written agreements, such as real estate contracts or contracts with a length longer than a year. Each state has its own legal requirements, and these should be consulted to see what regulations need to be met for every contract you make.

During the agreement process, one party offers certain terms and conditions that the other party either accepts or rejects. If one party decides to change the terms or conditions, the offer becomes a counteroffer. The parties can then change any condition or term of the offer. They will continue negotiating the terms until they have a meeting of the minds, which is when they've come to an agreement, and a contract can be created.

Both parties need to be competent to enter into the agreement. They cannot be under the influence of alcohol or drugs, have an unsound mind, or be under the age of 18. To enter into the contract, they also need to have legal power (which is especially important in the case of people with an outside interest, such as a third party or a company.)

The Consideration Component of a Contract

For an agreement to be binding and legal, there needs to be consideration. This means every party needs to receive something of value or consideration (such as a service or product on one end of the contract and monetary compensation offered in exchange on the other end of the contract.) 

If there’s no consideration, the contract will be considered a gift instead of a contract, which may or may not be legally binding depending on context.

Need Help With a Legally Binding Contract?

If you need help with a legally binding document, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts the top 5 percent of lawyers on 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.

Legally Binding Documents: FAQs

How to sign a legal document?

You should sign any legal documents using the same signature as you do on your checks, government identification, or contracts. For example, if you use your middle name in signatures, your legally binding document should use the same signature, unless otherwise stated. This is important because a notary public may require you to see your identification card to confirm and compare your signatures. 

What is a legally binding document?

A legally binding document is any agreement between two or more parties, which contains these three main elements: 

  • A subject (the terms of the contract)
  • Consideration (the motivation of the contract)
  • Capacity (the ability of every involved party to understand the contract and its consequences)