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Verbal Contracts: No Signature Required

If you make an agreement with someone that has all the elements of a contract (offer, acceptance, consideration, and intention), you are both competent to do so, and the contract is for less than $500, you often do not need a written contract. Which is to say, no signature is required.

Most experts agree, however, that the parties may soon forget the specific details of the agreement or disagree about their meaning, so it's best to have it in writing.

Written Contracts: Signature Required

Per the Uniform Commercial Code (UCC), contracts involving more than $500 in exchange for goods must be in writing (UCC Section 2-201--commonly called the statute of frauds). Contracts for land sales must be in writing as well.

Note that an "informal writing" (e.g., a memorandum on the back of napkin that includes all the necessary elements including the signatures of both parties) can satisfy the statute of frauds in the UCC so long is it represents the intent to be bound by the contract. Such signatures, however, are not likely to meet state requirements for real estate forms.

Of course, no matter what, the smartest thing you can do is actually create a well-crafted contract and sign it online. That way, everyone's responsibilities are accounted for and everyone has a legal copy.

What Does Your Signature Mean?       

Essentially, your signature means that you have read the agreement, agree to its terms and conditions, intend to enter into the agreement, and are legally authorized and mentally competent to do so.  

Therefore, it's wise to make sure that you understand all the terms of the agreement and that every "blank" in the document is filled. And, of course, make sure you get the other party's signature and a copy of the agreement with both signatures. (Signing a contract online means that both parties can have legal copies without the hassle of shipping, copying or faxing.)

When Not to Sign

It's often in your best interest that you do not sign an agreement:

  • that still has unfilled blanks, whether for a date, an item, or a dollar amount;
  • if you feel threatened, or under duress; or
  • if you feel like you don't understand something and want to review it with a lawyer.

Feeling Confident

You will feel most confident about signing a contract when you or a lawyer has drafted it on your behalf and you are already familiar with its terms and language. If you are in the service industry, you can find a free, customizable, professionally drafted contract for services here. We also offer more specific service contracts by industry. If you are selling goods, you can also find a UCC-compliant contract for products.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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