Signatures are not required

Getting a contract wet signed (pen & ink) is becoming increasingly difficult when many clients are virtual, businesses do not have offices, and the cost of postage outweighs the benefits.

In the construction industry, parties often start with the intention of getting a signed contract, but these good intentions are overtaken by just getting on with the job. It’s rare to find someone who finds paperwork more compelling than their actual job!

Unless you are agreeing a guarantee (which under the Statute of Frauds Act 1677 requires a signature), there are few formalities under English law. But can you impose a requirement for signature or provide that nothing is a contract unless and until it is signed?

Not binding until signed

The key sticking point was that an estimate (an offer) clearly stated that it was not binding until signed.

It was never signed.

Until either party provides goods, works or services listed in that estimate, then there is no contract and the court will uphold the ‘no signature, no contract‘ statement. However, once either of them perform as contemplated by the estimate, the court will look at whether the parties were agreed on all essential terms. If so, a contract can exist, even if the relevant document was never signed.

Making a contract

The principles on how you can create (or form) a contract are:

  1. A contract is made when one party accepts the other’s offer (to provide something specific)
  2. You can accept an offer by doing something ie by conduct
  3. You can accept draft terms, even if they are never signed
  4. Even if you insisted on signature, you can (by acts or words) later waive that requirement or right to sign, and create a contract without your signature
  5. You can waive the requirement for both parties to sign (even if set out in the draft contract) by adopting another form of acceptance eg conduct

So a draft agreement can become a final agreement if there is evidence that you have agreed (by words or conduct) all essential terms.

What should you do?

You need a simple contract process to ensure your company is only bound by terms when you are ready, when senior staff have approved the terms and you have agreed everything you think is essential.

Although silence is not acceptance, you can accept an offer, estimate or quote, by how you act after that document is sent. So if you disagree you MUST reply.

Case: Reveille Independent Llc v Anotech International (UK) Ltd [2016] EWCA Civ 443, [40-41]

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