8th Feb 2016

​Getting contracts signed – why?

Do contracts have to be signed to create a binding commercial agreement? Very short answer – except in some specific cases, such as relating to land, no; but the real answer – very risky not to have either a signature, or a process for agreement (click to accept, for instance).

Businesses do, or should, invest wisely in getting business terms set up for their business. Sometimes they don’t – sometimes they try and “borrow” another business’ terms, and that creates another raft of issues. But if you have gone to the trouble of having terms created for you, tailored to how you do business and covering off the risks you want to minimise, you really should get the contract terms signed before starting work.

The courts have been kept nicely busy, and lawyers’ pockets filled, by companies arguing over whether a contract has been formed where there was no signature, and therefore whether there is a legally binding obligation between the parties, or there isn’t. Sometimes the court will say there is; sometimes it will say there isn’t; sometimes it will imply the terms of a contract. The circumstances which dictate which way a court will go vary in each case, and so the courts remain busy. One thing’s for sure – you don’t want to be a company going through the courts. You want to be a company that has certainty, and knows what terms bind both parties. Get your contracts signed.

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