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Legally Binding Contracts

By: Garry Crystal - Updated: 15 Aug 2018 | comments*Discuss
 
Legally Binding Contracts

Although it is usually the wisest option, legally binding contracts do not just apply to contracts set out in writing. Under the eyes of the law verbal contracts are just as legally binding as written contracts. A contract is basically an agreement between two parties, for example, one party supplies a service and the other pays for it. Regardless of whether this contract is set down in writing or verbally it is still a binding contract under law.

Formation of a Contract

There are two basic rules to the formation of a legal contract; offer and acceptance. One party makes an offer or agreement to provide a service and the other party accepts the offer. By setting out the terms and conditions of offer and acceptance a legally binding contract has been made. If the contract is broken, or breached, then the law can used to enforce the contract.

Consideration and Intention

Consideration and intention are two other factors that make up a legally binding contract. Consideration is usually the exchange of something, such as wages for work with an employment contract. Intention is where both parties make a contract with the intention of that contract to be legally binding. These terms are used more in common law and may not hold any weight if a dispute reaches the law courts. If a dispute does reach the law courts then a judge will be looking closely at the terms and conditions of the contract in practice.

Legally Binding Contracts

Many people are unaware of the various ways that legally binding contracts can be set down. By far the best way of making a contract is for both parties to sit down and draft up a contract in writing with all the terms and conditions laid out. In today’s world there are many different forms of communication options, and emails, faxes, and telephone call agreements for exchange of services are all considered legally binding contracts. As long as an offer and acceptance is made or implied then any breach of contract can be legally disputed.

Unfair Terms of Contract

Although the contracts described above are legally binding, it does not mean that there is absolutely no way out of a legally binding contract. The terms and conditions set out in a contract are of paramount importance when disputes reach the legal courts. Where consumers are concerned, unfair contract terms and a lack of good faith on behalf of the trader may mean that the contract is not legally binding.

The basic rule as to what constitutes an unfair contract term is that there is a significant imbalance in the terms towards one of the parties’ rights and obligations. This imbalance will usually be detrimental to the consumer, and the trader will usually have shown a lack of good faith and will not have acted openly or fairly towards the consumer.

Types of Legally Binding Contracts

Many of us are unaware that we enter into legally binding contracts every day. The simple act of purchasing food from a shop is a legally binding contract between shop owner and consumer. Having dental work undertaken is a legally binding contract, a simple agreement to have someone cut the grass in your garden for some form of payment is a legally binding contract. Disputes usually occur when one person decides not to honour one or more of the terms of the agreement. There are certain contracts that under the law do need to be set out in writing; these will include contracts such as the sale of property, shares, and intellectual property rights.

Certainty of a Contract

If a contract issue does reach the law courts then there must be a certainty of contract. This means that for the contract to be legally binding it cannot be vague or ambiguous. The terms and conditions must have been clearly set out in fact and not just in principle. A judge may look at unclear terms and then try and clarify them but this will be dependant on the individual case appearing before the court.

Legally binding contracts are used by people every day. There are laws set out regarding legally binding contracts in order to protect both parties involved in the contract. Legal disputes can be long and costly, and breaching a contract is a serious matter that should never be taken lightly.

One interesting question is 'does a text message create a legally binding contract?'. Richard Brittle of Brittle Motors based in Stoke-on-Trent believes that it does. Over the coming weeks our leading in-house barrister will report on her findings which should make for interesting reading.

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[Add a Comment]
tiger - Your Question:
Hi me and my partner are going through the process of dividing our house.she has told me by text message she would accept 50k.would this be a law abiding ??

Our Response:
This would not be a legal contract. This is something you can work towards now you have been given a figure. However, until an agreement is reached and officially/legally signed for then your partner has every right to change her mind.
ContractsAndAgreements - 16-Aug-18 @ 9:57 AM
hi me and my partner are going through the process of dividing our house.she has told me by text message she would accept 50k ..would this be a law abiding ??
tiger - 15-Aug-18 @ 9:51 AM
@J - Someone has to be accountable for the agreement and that would be you or your employer.
NN - 13-Aug-18 @ 10:12 AM
If tickets for an event offer a pay monthly plan and then people pay the first payment and nothing else can they be made to pay the rest of the cost is this a legally binding contract? Or can they only be sold on at a later stage when they fail to pay potentially putting the event at risk?
Miialar - 12-Aug-18 @ 5:48 PM
Hi. I agreed to an online/telephone agreement with an advertising company for a sole trader I was working for. The advertising company knew he was a sole trader and that I was not connected to the business but allowed me to complete the contract and later sign for something else. The soletrader was not aware of my actions at the time. The advertising company was terrible and actually caused a loss of business due to emailing issues and the sole trader wishes to cancle all arrangements with them. Can he be held to anything as he did not sign for anything or complete the online agreement, even though they did advertise for 1 month?
J - 11-Aug-18 @ 5:52 PM
Barbara - Your Question:
So my partner had went and got his ex partner a car out in his name for her (well call her shiela) because she had bad credit they broke up and sheila was to pay so they set up a joint account sheila lodged money into that and the company withdrew it from that, sheila started missing payments and then stopped paying shiela was then caught drink driving, band and then driving whilst band etc the car was took from her , my partner had been sent a letter about the payments as off course the car still needed paying for, the company sold the car and there was an outstanding payment of a round £3000 still to be paid which was agreed to be paid by Sheila , she now refuses to pay anything. There is txts to prove the car was for her, that she was insured on it, she had been lodging payments into the joint account so it could be paid etc b ur she's saying there's no proof and that she won't hav to pay, if he takes her to court has he enough evidence indicating that the car was in fact for her and that sheila is infact due to pay for it?

Our Response:
As long as your partner can prove the money was a loan and the car was not a gift, he should have a case.
ContractsAndAgreements - 7-Aug-18 @ 12:56 PM
So my partner had went and got his ex partner a car out in his name for her (well call her shiela) because she had bad credit they broke up and sheila was to pay so they set up a joint account sheila lodged money into that and the company withdrew it from that, sheila started missing payments and then stopped paying shiela was then caught drink driving, band and then driving whilst band etc the car was took from her , my partner had been sent a letter about the payments as off course the car still needed paying for, the company sold the car and there was an outstanding payment of a round £3000 still to be paid which was agreed to be paid by Sheila , she now refuses to pay anything. There is txts to prove the car was for her, that she was insured on it, she had been lodging payments into the joint account so it could be paid etc b ur she's saying there's no proof and that she won't hav to pay, if he takes her to court has he enough evidence indicating that the car was in fact for her and that sheila is infact due to pay for it?
Barbara - 6-Aug-18 @ 9:22 PM
Sarah - Your Question:
My ex boyfriend and I own a house together, it is his intention to say in the house and buy my share. we agreed through text message late at night about figures. Which were then transferred. I feel I settled foolishly and would like to sell the house. Is the interaction and money transfer enough of a contact that I can’t change my mind?

Our Response:
If the settlement money has changed hands and you wish to go back on your promise you can change your mind and/or ask your ex to reconsider. However, his option would be to apply to court if you refuse to sign the transfer of sale documentation. If it goes to court, please be aware that court and court representation will cost.
ContractsAndAgreements - 23-Jul-18 @ 11:10 AM
My ex boyfriend and I own a house together, it is his intention to say in the house and buy my share. we agreed through text message late at night about figures. Which were then transferred. I feel I settled foolishly and would like to sell the house. Is the interaction and money transfer enough of a contact that I can’t change my mind?
Sarah - 21-Jul-18 @ 10:15 PM
wardy - Your Question:
Hi, we were looking for a venue to hold meeting from work, at sort notice I found a suitable place and a date a price was agreed upon via emails, we then found that our company doesnt use the payment system the venue wanted paying by so I cancelled via email,i found an alternative venue and the meeting went ahead, I have now been contacted by the original venue saying full payment is still due even though I cancelled with them and no deposit was paid, they say there terms and conditions say payment is still due in full even though a deposit wasn't paid, I ahev been told that if a deposit wsnt paid the contract is not legally binding , can you please advise if this is the case?

Our Response:
Where any terms and conditions sent through to you after booking? If so, you would have to read these.
ContractsAndAgreements - 3-Jul-18 @ 10:23 AM
Hi, we were looking for a venue to hold meeting from work, at sort notice i founda suitable place and a date a price was agreed upon via emails, we then found that our company doesnt use the payment system the venue wanted paying by so i cancelled via email,i found an alternative venueand the meeting went ahead,i have now been contacted by the original venue saying full payment is still due even though i cancelled with them and no deposit was paid, they say there terms and conditions say payment is still due in full even though a deposit wasn't paid, i ahev been told that if a deposit wsnt paid the contract is not legally binding , can you please advise if this is the case?
wardy - 2-Jul-18 @ 8:58 AM
@EO - you are trying to claim on a fragile technicality, I don't think you have much in the way of rights in this instance. They'll just say the cut-off point was midnight.
Robb - 14-Jun-18 @ 10:37 AM
Hello, I am self-employed, and have just had a contract job terminated. A clause in the contract states that it can be terminated in the first week for no reason, but although no clause in the contract states the standard working hours, it was terminated after the end of the working week as defined by a member of staff on company letterhead - “your standard working hours are 9am to 6pm“, and notice was served at 18:31. After the first week, I am entitled to a month’s notice period. Does an e-mail on company letterhead hold the same weight as a contractual clause? I feel that this does.
EO - 13-Jun-18 @ 12:15 PM
Tori - Your Question:
Hi. I am 17. My parents are divorced and I have little contact with my father. He was asked by my mother in text message if he would contribute half of cost if my driving lessons. He declined but replied he would give me £240 towards cost which would be my birthday and christmas money. He now refuses to give me anything. Is it legally binding as it was all in text.

Our Response:
It is not legally binding, your father is entitled to change his mind.
ContractsAndAgreements - 18-May-18 @ 2:21 PM
Hi. I am 17. My parents are divorced and I have little contact with my father. He was asked by my mother in text message if he would contribute half of cost if my driving lessons. He declined but replied he would give me £240 towards cost which would be my birthday and christmas money. He now refuses to give me anything. Is it legally binding as it was all in text.
Tori - 17-May-18 @ 3:20 PM
Rose - Your Question:
Hi there, I started a freelance job 5 months ago. I now doubt that what they said about how much I will earn, is humanly possible because I only make £5 per hour instead of the £10 which they said one can earn per hour. This is the email I received:"Please note, the role is paid on a per task basis, at a rate of £0.05 per complaint plus £0.15 per email. Dependent on individual work pace these values generally equate to approximately £10 per hour, with the ability to increase over time. If you are happy to progress on this basis, please let me know your availability to come into our offices for an initial chat."I have a contract but it doesn't mention anything about salaries. My question is, are they are allowed to tell me a possible hourly wage without it actually being possible to achieve? Many thanks for your help.

Our Response:
Workers paid per task they perform or piece of work they do (known as piece work) are classed as doing ‘output work’. They must be paid either at least the minimum wage for every hour worked or on the basis of a ‘fair rate’ for each task or piece of work they do. Please see gov.uk link here.
ContractsAndAgreements - 27-Apr-18 @ 12:40 PM
Hi there, I started a freelance job 5 months ago. I now doubt that what they said about how much I will earn, is humanly possible because I only make £5 per hour instead of the £10 which they said one can earn per hour. This is the email I received: "Please note, the role is paid on a per task basis, at a rate of £0.05 per complaint plus £0.15 per email. Dependent on individual work pace these values generally equate to approximately £10 per hour, with the ability to increase over time. If you are happy to progress on this basis, please let me know your availability to come into our offices for an initial chat." I have a contract but it doesn't mention anything about salaries. My question is, are they are allowed to tell me a possible hourly wage without it actually being possible to achieve? Many thanks for your help.
Rose - 20-Apr-18 @ 2:21 PM
Gazza - Your Question:
After a longer-than-normal negotiation to let a house that was concurrently listed for rent and for sale, the owner of the property we were pursuing sent us a text message: "Hi, could not get hold of Hamptons towards end of day, but we are in agreement to move forwards I believe, have instructed house to come off market asap. Many thanks." The following day the letting agent followed up with paperwork and a request for a holding deposit, which we paid immediately. Based upon that chain of events, we started buying basic furnishings that were scheduled to be delivered starting one day after the agreed upon date to begin our tenancy. Two days prior to the start of the rental term, we were sent the lease to be executed electronically. But before all parties had signed signed it, the agent informed us that the owner had actually not withdrawn the property from the market as promised and had since agreed to sell it to another party. Do we have any redress to either (a) enforce the owner's promise to let to us or (b) receive compensatory damages beyond the return of our holding deposit?

Our Response:
I am sorry to hear this. Unfortunately, there is little you can do with regards to this matter unless the lease was signed and exchanged. These are UK laws. However, if you live elsewhere in the world the laws may be different. In which case, as we are a UK-based site you may wish to seek further advice.
ContractsAndAgreements - 10-Apr-18 @ 12:35 PM
After a longer-than-normal negotiation to let a house that was concurrently listed for rent and for sale, the owner of the property we were pursuing sent us a text message: "Hi, could not get hold of Hamptons towards end of day, but we are in agreement to move forwards i believe, have instructed house to come off market asap. Many thanks." The following day the letting agent followed up with paperwork and a request for a holding deposit, which we paid immediately. Based upon that chain of events, we started buying basic furnishings that were scheduled to be delivered starting one day after the agreed upon date to begin our tenancy. Two days prior to the start of the rental term, we were sent the lease to be executed electronically. But before all parties had signed signed it, the agent informed us that the owner had actually not withdrawn the property from the market as promised and had since agreed to sell it to another party. Do we have any redress to either (a) enforce the owner's promise to let to us or (b) receive compensatory damages beyond the return of our holding deposit?
Gazza - 9-Apr-18 @ 10:43 PM
I am looking into leasing my music to other musicians, would a contract be able to be enforced if it was created on a computer or mobile device, I feel a direct debit would be the most comfortable way to ensure I am payed, but as they have control over when payments are cancelled, I cannot ensure I will be payed the agreed amount before payments are cancelled, I’m not the most experienced with financing and contracts, so thanks in advance for any advice.
Dec - 8-Apr-18 @ 11:23 PM
Tania- Your Question:
Hi I work as a credit controller we have a customer who owes £6k+ they had an agreement whereby they pay £500 a month will take over a year to clear the debt. Can we terminate the agreement and threaten legal proceedings? Thanks

Our Response:
Much depends whether you have anything in writing and what those agreement terms are. If you have, then you would have to have good reason for taking the matter to court i.e they have defaulted on payments/the agreement.
ContractsAndAgreements - 6-Apr-18 @ 11:42 AM
Hi I work as a credit controller we have a customer who owes £6k+ they had an agreement whereby they pay £500 a month will take over a year to clear the debt. Can we terminate the agreement and threaten legal proceedings? Thanks
Tania - 5-Apr-18 @ 6:54 PM
Rillwood - Your Question:
Not sure if this is the right place to post but here goes anyway.I’m in a lot of debt and need a car to get my autistic child to and from school safely, he has zero sense of danger, he gets middle rate dla and lower Rate mobility,I have zero chance of getting finance and I can’t afford to buy a car out right.My mother in law has offered to sell me her car and I can pay her monthly for it, she said we will get a solicitor to draw up a contract that states she owns the car until I have paid off the full amount,What I want to know is if a baliff could seize the car whist I’m paying her for it as I technically won’t own it whilst I’m paying instalments.I don’t want to agree to buy it and then have debt collectors take her car and her be left out of pocket, I’ll be paying for tax and insurance but the log book will stay in her name.I have a couple of ccjs that I haven’t paid which I think will be enforced soon, I’m not to bothered by that as I own nothing and only earn £400 a month but I just don’t want them to take her car.Thanks

Our Response:
In this case, it would be more advisable to ask your local authority to see whether your son is entitled to free transport to and from school. From what you say, the agreement with your mother-in-law sounds tenuous and you would have to see whether the logistic work in order for a solicitor to draw up such an agreement (which will also cost money). It's probably advisable to also get in touch with National Debtline who can work out your options to deal with your debts and current situation, please see link here.
ContractsAndAgreements - 27-Mar-18 @ 11:45 AM
Not sure if this is the right place to post but here goes anyway. I’m in a lot of debt and need a car to get my autistic child to and from school safely, he has zero sense of danger, he gets middle rate dla and lower Rate mobility, I have zero chance of getting finance and I can’t afford to buy a car out right. My mother in law has offered to sell me her car and I can pay her monthly for it, she said we will get a solicitor to draw up a contract that states she owns the car until I have paid off the full amount, What I want to know is if a baliff could seize the car whist I’m paying her for it as I technically won’t own it whilst I’m paying instalments. I don’t want to agree to buy it and then have debt collectors take her car and her be left out of pocket, I’ll be paying for tax and insurance but the log book will stay in her name. I have a couple of ccjsthat I haven’t paid which I think will be enforced soon, I’m not to bothered by that as I own nothing and only earn £400 a month but I just don’t want them to take her car. Thanks
Rillwood - 26-Mar-18 @ 5:11 PM
Hi, we signed a 3 year contract for a service to do with our phone system.Within the small print is says 'unless the contract is terminated by the client giving the company 42 days notice as intended termination the contract shall continue after the expiration of the initial minimum term for an additional period of time equivalent to the initial minimum term'. At the end of that extended term the contract should continue for an additional term and so on and so forth.This means to us after the first 3 years it rolled onto another 3; and it has now rolled onto another 3 making 9 years in total.We now want to cancel this contract but the supplier is saying we would have to pay 2 years that is left even though we have signed nothing since the initial contract in 2011?Is this enforceable to charge us 2 years cancellation?
Donna - 20-Mar-18 @ 1:05 PM
Hi, I booked a holiday through a well known site and paid a deposit, at the same time my friend booked the cottage next door. I then got a promotion at work which doesn’t entitle me to any holidays in the month I had booked the holiday. I have spent days now emailing the company that are trying to charge me a bigger deposit for a holiday that is 9 months away! I haven’t signed anything but because my friend isn’t cancelling they are saying they are now liable for the deposit! Please help, do I have to pay the larger amount? They keep saying it says it on the website but we didn’t use the website we rang an this was never explained to us (they also said they lost the recording of that call) thanks
Narelle - 3-Feb-18 @ 10:38 PM
Hi, I would greatly welcome some advice and help from the group. I entered into an agreement with a Ltd company to work self employed for X wage and X commission package. They paid for my training course which they agreed to do and I carried out work for them happily for 2 years. During the 2 years, I was paid weekly (often late by 1-5 weeks at times). During the early stages, a draft contract ("draft contract" was written in the email exchanges between us) was bounced backward and forward several times but my amendments were never agreed by the Ltd company and the terms of the contract was never agreed by me. We discussed these post start date but again, nothing was formalised. I have since left this company but now am going through the Employment Tribunal to resolve. Where do I stand with the Ltd Company? Is either party bound by the draft contract?
Arnold - 28-Jan-18 @ 12:04 AM
thank you for your reply. I signed a bond(slavery bond) which was in relation to clause 24. clause 24 was attached to contract. but on last page of CONTRACT it states : Acceptance of this offer I hereby accept the offer of employment on the terms and conditions as set out in 1 - 23. with myself and company rep signing? is a contract agreed with terms agreed a legally binding contract to the terms agreed?
jkbella - 26-Jan-18 @ 3:35 PM
Jkbella - Your Question:
Looking for general advice and support from group members. I am writing in regards to a company making a claim against me for training costs. We both signed a contract agreeing to terms and condition set out from 1 -23.They are raising a clause from 24.Can they legally go against a contractual agreement and force a clause that was not agreed by them and myself? The driver training bond is in relation to clause 24 which was not agreed in contractAnd help and advice would be great full God bless you all

Our Response:
Did you sign and agree to the clause 24/did this form part of your contract? If you didn't, then you may wish to give ACAS a call in order to explore your options.
ContractsAndAgreements - 23-Jan-18 @ 2:03 PM
Looking for general advice and support from group members. I am writing in regards to a company making a claim against me for training costs. We both signed a contract agreeing to terms and condition set out from 1 -23. They are raising a clause from 24. Can they legally go against a contractual agreement and force a clause that was not agreed by them and myself? The driver training bond is in relation to clause 24 which was not agreed in contract And help and advice would be great full God bless you all
Jkbella - 22-Jan-18 @ 8:35 PM
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