What is the execution of a contract?
The execution of a contract is the final, crucial step in forming a valid, legally binding agreement. It means that the parties have completed all the necessary formalities to bring the contract into legal effect. Usually, this involves both parties signing the written document. When documents are signed in duplicate, with each party signing a copy, this is often referred to as signing in counterparts.
The requirements for valid execution depend on:
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the type of contract (eg whether it is a simple contract or a deed)
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the legal status of the parties involved (eg whether a party is an individual, a company, or a partnership)
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the jurisdiction (England and Wales have similar rules, but Scotland has its own distinct rules)
If you aren't sure what makes an agreement legally binding, read How to form a valid contract.
What is a simple contract?
A simple contract (also known as a contract 'under hand') is any contract that isn't required by law to be executed as a deed. For most simple contracts, the law doesn't strictly require them to be in writing, but for transactions involving significant value or complexity, parties almost always choose to put them in writing.
However, certain transactions must be in writing, even if they aren't deeds. Some examples of this in English law include:
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a contract for the sale of land
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a transfer of the legal title to shares
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guarantees
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a Declaration of trust over land
For a simple contract, all that's usually needed is for the individual or authorised representative to sign the document in the appropriate place. Unlike some other documents, a simple contract doesn't need a witness to the signature.
How to sign a simple contract in England and Wales
The rules for signing (or executing) a simple contract depend on the identity of the contracting party. Generally, the only requirement is that the signature is placed on the document with the intention of giving it authenticity.
How an individual can execute a contract
The most common way for an individual to sign is with their manuscript signature (writing their name or initials and surname with their own hand on a paper document) in the appropriate place. English and Welsh law, however, generally accepts any mark placed on the document with the intention of making it genuine.
How a company can execute a contract
The formalities governing the execution of contracts and other documents by companies in England and Wales are outlined in the Companies Act 2006.
A company most often enters into a contract through an agent who has been expressly or impliedly authorised to act on the company's behalf. This person could be a director, but they don't have to be. The essential point is that the person signing must have the requisite authority to bind the company.
The company can also choose to execute the contract by the company itself, in writing under its common seal, although this is less common today.
How a partnership can execute a contract
Any partner can execute a contract on behalf of a general partnership. The signing section should clearly state the name of the partner and the partnership, and confirm that the signatory is a partner.
How a limited partnership can execute a contract
A limited partnership (LP) is not a separate legal entity like a company, so it can't sign a contract in its own name. The contract must be signed by one of the general partners acting on behalf of the partnership.
How a limited liability partnership (LLP) can execute a contract
An LLP has a few ways to execute a contract:
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affixing its common seal (if it has one)
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signature of a person with express or implied authority on behalf of the LLP
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signatures of two members
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signed by one member and witnessed
How to use electronic signatures
An electronic signature is any 'data in electronic form which is attached to, or logically associated with other electronic data that serves as a method of authentication'. This includes various forms, including:
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typing the signatory's name at the bottom of an email
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a scanned manuscript signature
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clicking an 'I accept' button on a website to confirm an order
You can use electronic signatures to execute most documents in England and Wales. For more information, read Electronic signatures.
What is a deed, and when do you need one?
A Deed is a special type of document that has stricter formal requirements than a simple contract. The law demands that certain transactions and legal acts must be executed as a deed to be legally valid. Documents that require deeds include:
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transfers or land or interests in land
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some leases
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mortgages and charges
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sales by a mortgagee
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the appointment and discharge of trustees
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powers of attorney, including lasting powers of attorney
For a document to be a valid deed, it must:
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clearly state that it is a deed (or use words to that effect)
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be validly executed as a feed by the person or people making it
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be delivered (meaning the person making it shows an intention to be bound by it)
The specific signing requirements for deeds are more complex than for simple contracts, often requiring a witness for individual signatures. For more detailed information, read Execution of deeds.
What are the rules for signing documents in Scotland?
While many principles are the same, Scots law has its own specific formalities for executing documents, which are primarily set out in the Requirements of Writing (Scotland) Act 1995. The Act establishes two key concepts:
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validity - a document is valid if it meets the minimum legal requirements, which usually means it's in writing and subscribed (ie signed) by the granter (ie the person or entity creating the obligation or conveying the right). A valid contract is legally enforceable
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valid execution (self-proving status) - a document is validly executed if it meets additional formalities, such as having a signature witnessed. A validly executed document carries a presumption of validity in court, meaning the court assumes the signature is genuine unless proven otherwise
In practice, for any formal document, you should always follow the requirements for valid execution to ensure the greatest legal certainty and avoid disputes about authenticity later on.
How an individual signs a contract in Scotland
When signing a written contract, an individual should sign the contract in the appropriate place, using either:
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their full name as it appears in the body of the document, or
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their full first name or initial, followed by their surname
For a document to be validly executed in Scotland, an individual's signature must be witnessed.
How a company signs a contract in Scotland
For a company to validly execute a document in Scotland, it requires a signature by one director, the secretary, or another authorised signatory. An 'authorised signatory' under Scots law has a broader meaning than under English law, referring to anyone whom the company has duly authorised to sign.
How a partnership or limited partnership signs a contract in Scotland
In Scotland, a Scottish general partnership or a Scottish limited partnership (which has a separate legal personality) signs a contract if it is signed on its behalf by a partner or a person authorised to sign the contract on the partnership's behalf.
How an LLP signs a contract in Scotland
A limited liability partnership signs a contract if a member of the LLP signs it on the LLP's behalf.
How to use electronic signatures in Scotland
Scottish law recognises electronic signatures and their admissibility as evidence. However, documents relating to Wills, testamentary trust dispositions, and settlements or codicils cannot currently be executed electronically.
If you need to put your agreement in writing, you can make a Contract for services or another Legal agreement. Once your document is ready, you can get it signed quickly and legally with RocketSign®. Do not hesitate to Ask a lawyer if you have any questions about how to properly execute your documents.
