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Unsigned contracts can still be binding.

31st October 2016 by Rob Kelly

Categories: What's New?
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It is a common misconception that contracts must be in writing, and a less common misconception that written contracts become effective only when signatures are applied.  In Reveille Independent LLC v Anotech International (UK) Limited [2016] EWCA Civ 443 the Court of Appeal upheld a decision of the Commercial Court which found that a party had accepted the terms of an agreement by its conduct, even though it had not signed the agreement and the agreement purported to require the signatures of both parties to take effect.

The case involved a cookware company and the producers of a popular television cooking show.  The company negotiated a deal with the producers by which it would be licensed to exhibit the show’s logo on its products, which would also be featured and promoted during three televised episodes of the show.  Long form contracts were never drawn up, but the principle features of the agreement appeared in a memo.  The memo was signed by the company but not by the producers.

The producers commenced proceedings to enforce the contract but were met by the company’s arguments that no binding agreement had been reached.  The memo had stated in terms that the producers would not be bound informally and that the contract would only become enforceable on being signed.  The producers’ arguments nevertheless prevailed before the Commercial Court, which found that a valid contract had been completed.

In dismissing the company’s appeal, the Court of Appeal found that the producers had, by their conduct, waived the provision that there would be no binding contract in the absence of their signature on the memo.  That conduct consisted of the producers having in fact performed their obligations in the manner contemplated by the terms of the agreement.

Comment: The decision is a useful reminder that a failure to comply with formal requirements specified in a draft contract does not necessarily mean that no binding agreement has been formed.  There are occasions when the conduct of the parties is sufficiently clear and unequivocal that a court may be willing to find that an agreement has been accepted by conduct.

If you would like further information please contact Rob Kelly

This article provides information and comments on legal issues and developments of interest.  The contents of this article do not constitute legal advice, is not a comprehensive treatment of the subject matter covered, and should not be relied on as such.  Legal advice should be sought about your specific circumstances before taking any action with respect to the matters discussed.

Rob Kelly

Associate — Dispute Resolution

Direct dial: 01202 755217

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Rob is an Associate Member of the Chartered Institute of Legal Executives (September 2009).  Rob also holds an LLB (Hons) degree in law.  He successfully completed training as a mediator under the ADR Chambers / Harvard Law Project Scheme and was one of the first mediators to have been appointed an IMI Certified Mediation Advocate in the UK with a commercial practice.

Rob specialises in dispute resolution through litigation, arbitration and mediation, with particular emphasis on contractual disputes, claims involving allegations of professional negligence (which he has prosecuted on behalf of commercial and private clients and defended on behalf of insurers, re-insurers and Lloyd’s syndicates). He is regularly instructed in connection with substantial disputes involving contractual, professional negligence, contentious probate issues.  Rob also deals with contentious property and landlord and tenant issues.

Rob’s style is a mix of listening, asking (tough) questions, diplomacy and reality testing. He’s interested, flexible, and pragmatic. He offers a common sense, realistic approach to assist his clients in searching for solutions to their disputes and brings straight talking and integrity to his work.

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