Key Takeaways

  • A signed agreement is legally enforceable when all essential elements of a contract are met.
  • Witnesses and notarization, while not always required, significantly improve enforceability.
  • Electronic signatures are legally valid in most jurisdictions.
  • Signatures should clearly indicate the signing party’s intent and authority.
  • A signed agreement may be voidable under specific circumstances like fraud, mistake, or lack of capacity.

A signed agreement is a signature on a piece of paper and is a powerful legal piece between two parties.

Even if a document is valid with a signature, courts take into consideration not only the legality, but also the verifiability of the document.

When Is a Signed Agreement Legally Enforceable?

Make sure that the language used in the document adheres to federal or state law.

  • Any provision within the document that does not adhere to the law, statute, or either party's civil rights, will be unenforceable and invalid.
  • If you're not sure the agreement you have in your hands is enforceable, contact a lawyer for more information.

Make sure that both parties sign the agreement and that the document is acknowledged by two witnesses or a notary public for both parties who rely on the document to verify its credibility.

  • Some states don't require witnesses or a notary public, but if one of the parties claim a signature is forged, it will be hard to prove otherwise without a witness or notary.
  • Some documents do require a notary with certain state language for people like attorneys or title companies who rely on the documents.
  • Even though a document is technically legal with a witnessed signature, it's not the case if parties don't accept the document as true.

Make sure to record the buy and sell of a real estate agreement in the property records of the jurisdiction where the property is located.

  • This is important when payments are made for a period of time, and the deed will not change hands until the full payment is made.
  • For example, if a seller signs an agreement to sell you a parcel of land but the agreement remains unrecorded, he can deed the property to someone else. The purchaser on the deed will acquire the property, and your agreement is invalid when you want to purchase the land.
  • You will most likely be unsuccessful purchasing this parcel of land because the agreement was unrecorded.

Essential Elements of a Valid Signed Agreement

For a signed agreement to be legally valid and enforceable, it must meet the following requirements:

  • Mutual consent: All parties must agree to the terms voluntarily and knowingly.
  • Offer and acceptance: One party must offer terms that the other party accepts.
  • Consideration: There must be an exchange of value between the parties.
  • Legal capacity: All parties must have the legal capacity to contract (e.g., not minors or mentally incapacitated).
  • Lawful purpose: The contract’s subject must be legal under federal and state law.

An agreement missing any of these core elements may be challenged in court and deemed unenforceable.

Does a Signed Agreement Have to Be Notarized?

Notarization is not generally required for a contract to be legally binding. However, notarizing a signed agreement can:

  • Add credibility by verifying the identities of the signers.
  • Reduce the likelihood of future disputes.
  • Be required for specific types of agreements (e.g., real estate transactions, wills, or powers of attorney in some states).

Check your state’s requirements, especially for contracts involving property or significant financial obligations.

Difference Between Signed Agreement and Court Order

A written agreement signed by two or more parties is a binding agreement, but it's enforceable until it becomes a judgment of the court. The court creates a judgment by taking in the contents of the agreement into its judgment. This judgment replaces the original agreement and is enforced by the court if either party violates it.

Electronic Signatures and Enforceability

Under the U.S. Electronic Signatures in Global and National Commerce (E-SIGN) Act and the Uniform Electronic Transactions Act (UETA), electronic signatures are legally recognized and carry the same weight as handwritten signatures in most circumstances. For an e-signature to be enforceable:

  • The signer must consent to use electronic records.
  • The software must retain a record showing intent and verification of identity.
  • The format must allow access and accurate reproduction for future reference.

Businesses using platforms like DocuSign or Adobe Sign are generally compliant with these requirements.

Can a Signed Agreement Be Broken?

  • One reason for a legitimate breaking of a signed agreement is the other party's consent to the break. A solution to this circumstance would be to record the consent in writing and insist this be irrevocable.
  • A second possibility is to break the agreement and accept the consequences. For instance, in the franchise setting, a franchisee breaks the contract with the franchisor and will pay the compensation under the law or contract.
  • A third legitimate possibility of breaking a signed agreement is if the person who wants to break the agreement can show the other party breached the contract in the first place.
  • Another reason to break an agreement is if it's a gentleman's agreement or is non-binding. For instance, it can be an agreement to agree.
  • An agreement can also be broken if the breach is not material and no consequences happen because of this.
  • External forces can force a breach of contract. Agreements commonly allow for both parties to avoid liability if the circumstances are beyond their control in cases known as force majeure.
  • Mistakes can also occur where the parties don't have to follow the contract. There are situations where certain mistakes can lead to the parties voiding contracts completely. If the signatory lacks the power of signature, that, in itself, can lead to the agreement being void.

It's important to be very detailed in the signed agreements of what is allowed and what is not, and not depend on the general law completely. If an agreement is illegal, it's not enforceable. If an agreement is too broad, the contract can also be voided without legal force. Since the uncertainty of each agreement is possible, it's not until you head to a court that you can understand whether an agreement is enforceable or not.

Common Pitfalls in Signing Agreements

Several mistakes can render a signed agreement invalid or subject to dispute:

  • Improper identification of parties (e.g., using nicknames or incorrect legal names).
  • Missing dates or failing to include the date of signature, which may create ambiguity.
  • Ambiguous terms that can be interpreted multiple ways.
  • Signing in the wrong capacity, such as a representative signing personally rather than on behalf of an entity.

To avoid these pitfalls, it’s advisable to clearly print names, titles, and include the date next to each signature.

Signing on Behalf of a Business or Organization

When signing an agreement on behalf of a corporation, LLC, or other legal entity:

  • Ensure that the signer has actual authority (e.g., is an officer or has a board resolution).
  • The signature block should clearly show the business name, the signer’s title, and that they’re signing in their official capacity (e.g., “ABC Corp, by John Doe, CEO”).
  • Failing to properly indicate the signing capacity may make the individual personally liable.

Clarity in representation protects both the business and the individual from legal ambiguity.

Frequently Asked Questions

  1. Is a contract valid if it’s signed electronically?
    Yes, electronic signatures are legally enforceable under U.S. federal and state laws when proper procedures are followed.
  2. Do both parties have to sign a contract for it to be binding?
    Generally, yes. Mutual agreement is necessary, and both parties should sign to demonstrate acceptance.
  3. What makes a signed agreement invalid?
    Common reasons include lack of capacity, duress, fraud, mutual mistake, or if the agreement involves illegal activities.
  4. Is notarization required for all signed agreements?
    No. Most contracts are valid without notarization unless state law or contract type requires it (e.g., deeds, real estate).
  5. Can I sign on behalf of a company?
    Yes, if you have proper authority. Always indicate that you are signing in your official capacity to avoid personal liability.

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