Unsigned contracts can still be binding.
31st October 2016 by Rob Kelly
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  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.
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