ICAEW.com works better with JavaScript enabled.

Case law: Party to agreement requiring signature by all parties could not claim it was not bound because the other party had not signed it

Where there is an agreement stating it is only binding if signed by all parties, each party should ensure it is signed by all of them before starting to perform their contractual obligations, or risk a legal argument that it is not binding.

Legal Alert

This update was published in Legal Alert - August 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A proposed agreement – stated to be a 'Merchandising Deal Memo' – specifically said that it was not binding unless signed by both parties. Only one party ('the licensee') signed it, and only did so after amending it and sending it to the other party. The licensee later argued that this meant it was not bound by the agreement - its amendments meant sending the agreement back amounted to a counter-offer, which the other party never accepted. Therefore, the agreement did not apply and he did not have to pay for the services provided under the agreement.

The court disagreed, ruling that the agreement had been 'clearly and unequivocally' accepted by both parties. For example:

  • The licensee had behaved as if the agreement was legally binding
  • The licensee had actively enabled the other party to perform those obligations
  • It had benefited from the agreement and had not, at any point during performance of the agreement, suggested it was not binding
  • The other party had carried out its obligations under the agreement, and had therefore:

    • accepted the terms of the agreement by its conduct
    • waived the method of accepting its terms (ie signing it) required by the agreement itself

However, a party can only be treated as having waived a requirement in an agreement, specifying how the parties must agree its terms, if the other party is not prejudiced. In this case, the licensee had not been prejudiced by the other party's acceptance of the agreement by conduct.

Operative date

  • Now

Recommendations

  • A party to an agreement which says it is only binding if signed by all parties should ensure it is signed by all of them before they start to perform their obligations under it, or risk a legal argument that it is not binding

Case ref: Reveille Independent LLC v Anotech International (UK) Ltd [2015] EWHC 726

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

Copyright © Atom Content Marketing