Summary
- An unsigned contract can be legally enforceable in England and Wales if both parties demonstrate an intention to create legal relations and have accepted the terms through conduct, such as delivering goods, making payment, or performing agreed services.
- Verbal contracts and unilateral contracts (accepted through performance rather than signature) can also be binding, though they are harder to enforce due to limited documentary evidence of the agreed terms.
- Certain contracts must be in writing to be valid under English and Welsh law, including contracts for the sale of land, equitable mortgages, intellectual property assignments, deeds, and share transfers.
- This article is a guide to unsigned contract enforceability for business owners in England and Wales, explaining when and how a contract without a signature can be legally binding.
- LegalVision is a commercial law firm that specialises in advising clients on commercial contracts and dispute resolution.
Tips for Businesses
Keep detailed records of all communications, invoices, and evidence of performance where no signed contract exists, as this documentation is critical if a dispute arises. Seek to formalise agreements in writing and obtain signatures wherever possible. Always use written, signed contracts for land sales, intellectual property assignments, deeds, and share transfers, as these cannot be enforced without them.
Many business owners assume that without a signature, a contract cannot bind them, but this is not always the case. In certain circumstances, an unsigned contract can be just as enforceable as a signed one. This article will outline when and how an unsigned contract can be enforceable.
Conditions of a Legally Binding Contract
There are five steps to building and creating a legally binding contract. You and the other party you wish to conduct business with must have:
- made or received an offer to do business;
- had that offer accepted;
- provided with consideration (usually payment) for the arrangement, or have an intention to provide payment if this is a long-term arrangement;
- ensured the terms of the contract are clear and certain; and
- demonstrated an intention to create a legal relationship.
You can show you had an intention to create a legal relationship in several ways, including:
- agreeing on a ‘terms sheet’ that sets out the conditions of an agreement;
- arranging for payment of services; or
- having both parties sign the contract.
Acceptance by Conduct
Acceptance by conduct occurs when one party starts performing the duties provided in the contract without signing a legal document. In doing so, they demonstrate their intention to honour the terms of the agreement, making the contract legally enforceable.
For example, parties can show they have provided acceptance by conduct if they:
- provide payment for a service; or
- if a party provides a service (i.e. delivers goods and requests payment).
Even without a signature, if a party performs the duties outlined in the contract, this demonstrates that they have accepted its terms and established a legal relationship. As a result, you may be able to enforce the terms of a contract if required. Whether the written agreement is enforceable will often depend on whether the written contract was clearly made available to the receiving party before the parties perform their obligations under the contract.
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Verbal Contracts and Unilateral Contracts
There are two other situations where you do not need a signed contract for an agreement to become legally binding.
Verbal Contracts
There is often minimal documented evidence to show that an arrangement exists with oral agreements. This means enforcing terms and proving what both parties agreed to is often difficult. Nevertheless, the same principle of acceptance by conduct applies, even if you have not written the terms.
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For example, if you verbally agreed to purchase goods from another party, and they deliver them, that constitutes an enforceable contract. This is because both parties showed acceptance of the agreement through their actions. If there is a problem with the goods delivered, the recipient may be able to claim damages against the supplier of the goods.
Unilateral Contracts
A unilateral contract is an agreement created by an offer that parties can only accept by performing the agreed services. Logistics businesses often use unilateral agreements to deliver goods or vehicles.
Enforceability of Certain Contracts
It is important to note that some formal contracts must be made as a written document, otherwise they will not constitute a valid contract under the laws of England and Wales. These include contracts for the sale of land, an equitable mortgage, assignment of intellectual property rights, execution of a deed, and the transfer of shares.
Practical Considerations for Unsigned Contracts
While unsigned contracts can be enforceable, it is generally advisable to have signed agreements whenever possible. Signed contracts provide clearer evidence of the parties’ intentions and can help prevent misunderstandings or disputes.
If you find yourself in a situation involving an unsigned contract:
- Document All Communications: keep records of emails, messages, and notes from phone calls or meetings that discuss the agreement;
- Gather Evidence of Performance: collect any proof that either party has begun fulfilling the contract terms, such as invoices, receipts, or delivery confirmations;
- Act Consistently: continue to perform your obligations under the agreement, as this strengthens the argument that a binding contract exists; and
- Seek Legal Advice Early: if you are unsure about the enforceability of an unsigned contract or if a dispute arises, consult with a legal professional promptly to understand your rights and options.
Key Takeaways
You can enforce an unsigned contract in England and Wales if you meet specific conditions. To have an enforceable unsigned contract, you must show that both parties agreed on the terms and intended to form a business relationship.
A contract can be legally enforceable if it:
- has been signed;
- is unsigned, but parties to the contract are performing its terms; or
- is verbal, and parties are undertaking the terms of the agreement.
If you need more advice on signing or enforcing a contract under UK law, LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced contract lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Legally binding contracts are those in which both parties have accepted the terms and shown an intention to create legal relationships.
You can enforce the conditions of a legally binding contract by seeking damages against a party that does not comply with its contractual obligations. For example, damages can include the remuneration of losses caused by a failure to provide a service agreed to under the contract.
To determine if an unsigned contract is enforceable, looking at the other party’s conduct is an effective step. If they have, for example, made only a verbal agreement with your business but have then paid for your goods, this indicates an intention to form legal relations.
Depending on the existence of other elements, this may give rise to a binding contract with obligations the other party must uphold.
Yes, verbal contracts are enforceable if both parties demonstrate acceptance through their conduct. For example, delivering goods following a verbal agreement constitutes an enforceable contract, allowing either party to claim damages for non-performance.
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