Your Unsigned Deal: Still Legally Binding?

By: Lisa Brennan

When entering into an agreement, a common assumption often is that a contract needs to be signed in order to be legally enforceable. However, a signature is not always required. If you are dealing with an unsigned contract, you might wonder whether it can still be enforced. Depending on the circumstances, an unsigned contract may in fact be enforceable.

Contracts 101

Let’s start with the basics of contract law. At its core, a contract is an agreement between parties that creates mutual obligations. Typically, in order for a contract to be enforceable, it must include these basic elements:

  1. Offer: One party makes a proposal to do (or not do) something.
  2. Acceptance: The other party agrees to the offer.
  3. Consideration: There must be something of value exchanged between the parties – usually money, but this could be anything that has value.
  4.  Mutual Assent: Both parties must show that they intend to be bound by the agreement. While a signature is the most common method to demonstrate this agreement, it is not always required.

Enforcing an Unsigned Contract

The enforceability of an unsigned contract largely depends on several factors. It can be helpful to look to the context in which the agreement was made. Here are a few scenarios where an unsigned contract might still be enforceable:

  1. Oral Agreements: Virginia does recognize that an oral contract can be just as binding as a written one, provided they meet the essential elements of a contract discussed above. If an agreement was reached verbally and includes consideration, it may be enforceable even without a written signature. Of course, proving this agreement without a signed writing can become challenging.
  2. Performance of the Contract: If the parties have begun to perform their obligations under the contract, this conduct between the parties can serve as evidence of a binding agreement. For instance, if one party has delivered goods or services and the other has made payments, this conduct can suggest the existence of an enforceable contract. After all, the exchange of goods/services and money between the parties would not occur absent some sort of agreement.
  3. Other Written Evidence: Even without signatures, other written evidence can support the existence of a contract (subject to the rules of evidence in a courtroom). Emails, letters, or other documents outlining the terms agreed upon might be used to prove that a contract was intended.
  4. Statute of Frauds: Certain types of contracts must be in writing and signed by the party to be charged to be enforceable under the Statute of Frauds, such as contracts for the sale of real estate, guaranties for the debts of another or agreements that cannot be performed within one year (See Va Code §11-2 for a complete list). If a contract falls into one of these categories and is unsigned, it is not enforceable.  Also noteworthy here is the requirement only of a signature from the “party to be charged”. This means that both parties may not need to sign. In this context, it would mean that only the signature of the person whom you are trying to enforce the contract against needs to have a signature on the agreement. This would allow one party to pursue an action to collect on a loan, for example, even where only one party signed.
  5. Promissory Estoppel: In some cases, if one party has reasonably relied on the promises of another party to their detriment, the court may enforce the contract under the doctrine of estoppel, even if the contract was not formally signed. This is to protect one party from unjust enrichment and in the interest of fairness.

Practical Considerations

While unsigned contracts can in fact be enforceable, relying on them never secures your position as well as a signed agreement would. For the sake of clarity and to avoid disputes, it is generally advisable to have ALL contracts signed. This will reduce the risk of disagreements about the contract’s terms or its very existence. It can often be difficult to prove who said what and when, especially as memories fade over time or where there may have been a fundamental miscommunication during a conversation.

Whether dealing with oral agreements or written communications, the key is to ensure that there is clear evidence of mutual assent. When in doubt, consulting with Way Law can offer you guidance tailored to your specific situation, helping to ensure that your rights are protected!