Introduction

You’ve probably heard the phrase, “Get it in writing!” a hundred times, whether from a well-meaning friend, a lawyer, or that one uncle who thinks he’s an expert on everything. But here’s the question: Does a contract need to be signed to be valid? Spoiler alert: the answer is not always as straightforward as you might think.

Read: How to read business contracts like a lawyer

What is a contract, really?

First, let’s define what a contract actually is. A contract is simply an agreement between two or more businesses that creates mutual promises enforceable by law. In other words, it’s a fancy way of saying, “We both agree to do these things, and if one of us doesn’t, the other can call in the law.”

Contrary to popular belief, a contract doesn’t always have to be in writing, let alone signed, to be valid. That’s right: you could technically agree to a contract over coffee, a handshake, or even a pinky swear—though, let’s be honest, the latter might not hold up too well in court.

But before you start sealing deals with fist bumps, let’s talk about when a signature is necessary and when it isn’t.

When do you need a signature?

There are certain times when a signature is absolutely essential to ensure your contract is valid and enforceable. Although it depends on the type of law, here are some key situations:

Contracts to be required by law to be in writing

Some contracts must be in writing to be legally enforceable. This is often due to the Statute of Frauds—which requires certain types of contracts to be written and signed. Examples include:

• Real estate agreements: You can’t buy or sell a house on a verbal handshake, no matter how trustworthy the other person seems. Property contracts need to be written and signed.

• Agreements lasting over a year: If a contract is going to take more than a year to fulfill, most jurisdictions require it to be in writing.

• Contracts for goods over a certain amount: The sale of goods over a certain value (often $500 or more) typically requires a written contract. Sorry, your verbal deal to buy a car for $1,000 probably won’t cut it.

When clarity and certainty are crucial

Even if the law doesn’t require it, having a signed contract is often just smart business. A written, signed agreement makes it crystal clear what both parties have agreed to, reducing the risk of misunderstandings. Plus, it’s way easier to show a judge a signed piece of paper than to argue, “He said, she said” in court.

When you want proof

Signatures provide proof that all parties agreed to the terms. It’s one thing to say you had a deal, but it’s another to have a document with both parties’ John Hancocks on it.

Read: Do legal documents have to be written in English?

When is a signature not required?

Now, there are plenty of situations where a contract can still be valid without a signature. Here’s when a signature might not be necessary:

Oral contracts

Yes, you read that right. In many cases, oral contracts (or verbal agreements) can be legally binding. If all the essential elements of a contract are present—offer, acceptance, consideration, and mutual intent to be bound—a court might enforce it. So, if you agreed to pay your neighbor $100 to mow your lawn every week, that’s technically a contract—even if nothing is signed.

Implied contracts

These are contracts formed by actions rather than words. For example, if you go to a restaurant and order a meal, there’s an implied contract that you’ll pay for it when the bill comes. You didn’t sign anything, but everyone knows the drill—you eat, you pay.

Email and digital agreements

In the digital age, a lot of agreements happen over email or even via text messages. Believe it or not, a court might find these exchanges to be a valid contract, especially if there’s clear evidence that both parties agreed to the terms. Just remember: what’s in your inbox might be more binding than you think.

Read: What does executing a contract mean?

How do courts decide if an unsigned contract is valid?

So, how does a court decide if a contract is valid without a signature? Here are the key factors they’ll consider:

Intent of the parties

Did both parties clearly intend to enter into a binding agreement? Courts will look for evidence like emails, text messages, or even the conduct of the parties to determine if there was a mutual intent to be bound by the agreement.

Performance of promises

If both parties have already started performing their obligations under the contract (like making a payment or delivering goods), that can be strong evidence that a contract exists, even without a signature.

Communication

How did the parties communicate about the contract? If they discussed it in detail and took actions that suggested they believed they were in a binding agreement, a court might enforce it.

Reasonableness

Would a reasonable person believe there was a contract? Courts often use a “reasonable person” standard to determine whether an agreement should be legally binding. If it looks like a contract and quacks like a contract, it’s probably a contract.

Read: Storage of legal documents: Best practices

When in doubt, get it in writing

So, should you always sign a contract? The short answer is: Yes, when you can. Even when it’s not legally required, having a signed, written contract is almost always the best way to protect yourself. It provides clarity, avoids misunderstandings, and makes things easier if you ever end up in court.

But there are times when an unsigned or oral contract can still be valid. Just be aware that these situations can get tricky, and the lack of a signature could make proving your case harder. When in doubt, get it in writing.

Conclusion

To sign or not to sign? That is the question. And while you don’t always need a signed contract for it to be valid, having one can save you a world of headaches. It makes everything clear, provides solid proof of the agreement, and helps ensure that everyone plays by the same rules.

So, the next time someone tries to make a deal over a handshake or a casual chat, think twice. A signature might just be the easiest way to keep things clear, fair, and legally airtight. Because when it comes to business, you want to be sure you’re covered—no matter what.

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.