4

Is a contract valid if one party doesn't know the other has signed? For example one party signs a contract, faxes or emails it to the other party, but the other party doesn't reply. Can the other party play it to their advantage saying "we had agreed to this!" when it works for them and "we never signed this!" when it doesn't?

3
  1. Fax or email

At this time in common law, faxes and email are considered to have been accepted when actually communicated to the other party. This means that if I sign a contract and send it to you, I acceptance of the offer is not actually effected until you read it.

  1. Post

However, the postal acceptance rule can play havoc with this. Under this rule, and specifically for post, as long as there is some indication that we contemplated acceptance by post, my acceptance of the offer is effected the moment I put it in the mailbox, regardless of when or whether it actually reaches you.

Your scenario

  • A has signed a contract and faxes it to B
  • B doesn't reply
  • A or B tries to claim that they never agreed to this or signed this

B has read the contract and was the offeree

If B claims not to have read it, A must prove that they have, or that acceptance was otherwise communicated to them. This is unless the postal acceptance rule applies, in which case it does not matter whether or not it was read. Proving that it was posted is a different matter.

B hasn't read the contract or was not the offeree

  • A was the offeree (A sent B a signed contract)

In this case, A must prove that they actually communicate a revocation of the offer. If B has not accepted the offer, then A can communicate this in any reasonable way.

If B has accepted the offer, then A must prove that the revocation was effected prior to their acceptance. Otherwise, A is bound by the contract.

  • A and B drafted this contract together (offer and acceptance is unclear but there is clearly agreement at some point)

In this case, it's a bit murkier but it is likely that A would not be bound by the contract.

  • I think your info is still relevant but possibly interpreted the scenario in reverse. If A signed a contract, faxes it to B, B doesn't reply, then B claims they never agreed or alternatively claims they did (whichever benefits them most in a dispute). In your example A was the one acting sneaky. – SamT Apr 17 '16 at 22:57
  • @SamT Interestingly most of the above still applies - I'll edit the answer to make it clearer how it does, though. – jimsug Apr 17 '16 at 23:10
2

The signed contract is simply good evidence of the agreement you made, nothing more (that may not be true in all jurisdictions). If, as in your scenario, John sends Jane a contract, Jane signs and returns to John, and John doesn't respond:

  • Jane should continue to communicate with John through all available channels that she has accepted and she considers the agreement in effect

  • In the event that things go badly and John starts playing games and it's worth it to Jane to fight it rather than simply walk away and learn not to deal with John in the future - Jane sues, Jane shows the communications leading up to the contract, the copy with her signature, the communication in which she sent the contract to John, and the follow-up communications to the judge. Civil cases are won by a preponderance of the evidence. What evidence does John have? Shrugs his shoulders and lies to the judge? Judges are good at recognizing that. Keep records and you'll be alright.

2

Let's keep things simple: assume that Alice has made an offer to Bob that, when Bob accepts it, will become a binding contract.

The contract is binding when Bob communicates his acceptance to Alice; there is no need for him to sign anything (see below).

He can communicate his acceptance verbally by talking to her in person or by telephone or Skype or any other means of making a verbal communication: the contract becomes binding immediately Alice hears the acceptance.

He can also communicate his acceptance in writing and a number of court precedents and statutory rules exist to determine when the communication has been made:

  • in person, when Bob hands Alice the communication
  • physical delivery, when delivery to Alice's address has been made (there's a whole subcategory of cases that deal with if "delivery" actually happened but we won't go there)
  • the postal rule, when Bob drops the communication with adequate pre-paid postage in a legal mail deposit box (there is no requirement for certified mail but this helps provide evidence of exactly when Bob did this). There is a valid contract from the time of posting, not when (or if) the communication is delivered. The postal rule is old common law and holds in most common law jurisdictions.
  • electronic communications, because these are newer than the post they are usually governed by specific statutes. For example, in NSW, Australia a faxed acceptance is valid when the sending machine receives conformation from the receiving machine that the transmission was successful. However, for email or Facebook messages etc. the communication is effective from when the email is read - something the sender has no control over; therefore fax is the preferred way of doing this.

As you can see, in some circumstances Alice can be bound without knowing she is. In addition, there are circumstances where the acceptance can validly served on an agent of Alice, say an employee or her solicitor: Alice is bound from the time her agent receives the acceptance.

Now, Alice is free to put conditions on the acceptance like: it is only when Alice receives the signed contract from Bob who must pass it to her with his left hand while standing on one foot and whistling Dixie. If such are the conditions then they must be fulfilled to create a binding contract, sending it by fax or post or passing it while whistling Yankee Doodle won't cut it.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.