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Legally Binding Contracts

By: Garry Crystal - Updated: 16 Oct 2017 | 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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I signed a legally binding employment contract. I never looked at the conditions as it was an amended and new contract when I changed my work hours. When I wanted to hand in my notice I looked at the contract properly to see how much notice I would need to give. On further inspection of the contract I noticed that my salary had increased in my favour. Will this salary be upheld. Thanks
Shaz - 16-Oct-17 @ 6:54 PM
Hi my husband advised a family friend to purchase a machine that my husbands company may want to lease that could create a extra source of income for both my husband and family friend.My husband explained to friend he could not go into partnership because of conflict of interest but maybe they could write up a contract between me (wife) and there company so that we could benefit in that way if it went ahead.They purchased machine through their company but never got around to writing up a contract between them and myself, but both parties being my husband and friend had discussed a partnership via email is that a binding contract?We started making payments towards machine then my husbands company decided on a different avenue and now they are left with the machine and are suing my partner for half the cost of machine we have not received any financial gain from machine so are we obligated to pay or is there away of getting out of this? Any assistance would be appreciated.
Rick - 28-Sep-17 @ 3:14 PM
Rasher - Your Question:
I entered in an agreement to rent a Merchant Card machine. The representive was aware at the time of sale my shop lease was due for renewal at the end of the year so the agreement would only be for a year. The Card machine company confirmed they did agreements for 1year/2years etc. The representive led me to belive I was signing a one year contract. when I came to cancel I was informed , it was a four year contract. I am now being taken to court Any advice please.

Our Response:
You would have to read the terms and conditions of the said contract. You would have to have a written confirmation the contract was for one year, if it differs from the terms and conditions contained within.
ContractsAndAgreements - 18-Sep-17 @ 1:52 PM
I entered in an agreement to rent a Merchant Card machine.The representive was aware at the time of sale myshop lease was due for renewal at the end of the year so the agreement would only be for a year.The Card machine company confirmed they did agreements for 1year/2years etc.The representive led me to belive I was signing a one year contract. when I came to cancel I was informed , it wasa four year contract. I am now being taken to court Any advice please.
Rasher - 15-Sep-17 @ 8:48 PM
annoyed - Your Question:
My ex-partner recently contacted me by email offering a lump sum in full and final settlement of maintenance for our son. I accepted this and requested he pay within 7 days. He told me that he would have the necessary documents drawn up by his solicitor and they would pay the lump sum on receipt of the papers signed by me. I agreed. He is now saying he can't pay it because his solicitor has told him that he can only pay a lump sum once a year and a signed document by me would not stand up in court and I could request further money in a year's time. I told him that I would sign a document stating that I would not ask for more money but he is now refusing to pay the lump sum. Is the offer by him and acceptance by me via email legal binding?

Our Response:
No, this is not legally binding as his solicitor is correct. Your ex may have agreed to pay you a lump sum in principle, but this does not stop you from applying for child maintenance in the future. You may feel positive towards the agreement now, but say for instance your circumstances change and you lose your job, or you become less well off for some reason. Or the cost of living goes up and a decade down the line you feel you have been short-changed, it means you would be able to claim from CMS and this would override any previous solicitor's agreement made. So, your ex just actually being sensible here and adhering to the advice of his solicitor. A solicitor's agreement would not stand up in court, so despite your promises, circumstances can and do change and your ex is obviously erring on the side of caution that he could end up paying twice. I'm afraid, no solicitor would ever encourage him to pay a lump sum now in order to offset future child maintenance. It sounds as though this seemed like a good idea drawn up in principle and without too much forethought, but a practical one that should be avoided.
ContractsAndAgreements - 7-Sep-17 @ 11:46 AM
My ex-partner recently contacted me by email offering a lump sum in full and final settlement of maintenance for our son.I accepted this and requested he pay within 7 days.He told me that he would have the necessary documents drawn up by his solicitor and they would pay the lump sum on receipt of the papers signed by me. I agreed.He is now saying he can't pay it because his solicitor has told him that he can only pay a lump sum once a year and a signed document by me would not stand up in court and I could request further money in a year's time.I told him that I would sign a document stating that I would not ask for more money but he is now refusing to pay the lump sum. Is the offer by him and acceptance by me via email legal binding?
annoyed - 6-Sep-17 @ 6:35 PM
I received a letter containing details of a pension payout with the following wording “I’ve arranged for your Pension Commencement Lump Sum (PCLS) of £15,463.14 to be credited to your bank account.The payment should reach your account within 5 working days. Your first pension payment will be paid to your bank account on 7 September 2017 and will include the arrears due from your retirement date.”My retirement date was September 2013.The pension company are now claiming that they used September 2017 as my retirement date and that the PCLS was calculated up to that date and that no arrears are due.I would contest that apart from them making an offer and me accepting it they have used the same lump sum in both calculations which cannot be correct.Can you please advise?
Stewart - 5-Sep-17 @ 11:34 AM
Following our DIY divorce in 1996 my ex husband and I drew up an agreement which we both signed and had witnessed. One clause stated that I would be entitled to a 1/6 of his pension to cover the shortfall in my pension caused by a 12 year career gap to have children. We didn't get a consent order at the time and since then I remarried and got divorced again so I know this bars me from claiming anything from my first husband under matrimonial law but I wondered if the agreement could be considered a legally binding contract and whether failure to fulfil that clause would be a breach of contract. My ex did start paying me a nominal amount but has now decided to stop and I want to know if it is possible to condsider this a breach of contract and seek recompense in a court of law.
Susanne - 8-Aug-17 @ 8:36 AM
Fred - Your Question:
I have signed a letter of acceptance from an insurance company for the payout after a fire, they now tell me they made an error and wont pay out, is the legal? What do I do? Thankyou

Our Response:
It's difficult to know as much depends upon what they are stating the 'error' is. Insurance firms will refuse to pay out of there has been a mistake on the form, or if circumstances haven't been updated, or the person claiming has mislead the insurance company. They will always try to find a way not to pay if and where they possibly can. Therefore, you may wish to seek independent advice.
ContractsAndAgreements - 7-Aug-17 @ 2:02 PM
I have signed a letter of acceptance from an insurance company for the payout after a fire, they now tell me they made an error and wont pay out, is the legal? What do I do? Thankyou
Fred - 5-Aug-17 @ 1:12 PM
If a car dealer emails a bill of sale contract that I did not have a chance to sign but sent in a picture of a certified check with that businesses name on it is that legally binding in any way shape or form
Mitch - 4-Aug-17 @ 2:43 AM
I met a guy and he took me out 4 times. We got on quite well. It turned out he was looking for a ghostwriter to write his book.As I'm a good writer and needed the money I offered to write the book for a third of the normal fee for this type of project-also based on the fact he'd bought me a bed a short while after we met because I'd been complaining about back pains which I thought was amazingly kind. He tried to pursuade me to write for free but I refused as I knew the huge amount of work that lay ahead and I wanted to secure everything should be done as professional as possible. I carefully created a contract and we discussed a little back and forthabout the terms. I accepted to correct one part in order to make the conditions equal to both parties in case of abandonment. He was happy with the final contract and we both signed it. I had created a work plan as well and set out dates to conduct interviews as basis for the content. Following the interview sessions I was meant to carry on with the project by myself-which I did. I made sure to keep him informed weekly about my progress and send him my written work of minimum 3500 words per week. He became unpleasant as he realised I wasn't intending on inviting him to my home again following the interviews and tried to suggest I wouldn'tget any payment unless he approved of all content even when he admitted not to have read all of it but merely random parts. I asked in writing and verbally if he was sure he wanted to continue the project as he'd asked me for a meeting. This meeting took place after my second monthly fee was already due and he hadn't paid. He paid the first monthly fee two weeks later than the due date which I accepted. When my second monthly fee was due he informed me he didn't have any money for mebecause other business deals hadn't given the expected return. I let him know this was unacceptable and that if he wasn't willing to offer me a date for the payment I would regard it as abandonment from the project and the contract. I offered him a chance to pay the following Monday by 5pm and let him know I would regard it abandonment if he still refused to pay and that I intended to get legal assistance.He then send abusive threatening whatsapp medsages in response and claimed he would say I had forged his signature on the contract and that I had conned him for the bed ,the 200£ he'd given me for a dress as well as the first monthly fee of 1650£-which was paid into my bank account. I did not respond. What are my best options in this case?Kind regards Gee
Gee - 24-Jul-17 @ 1:53 AM
Following our DIY divorce in 1996 my ex husband and I drew up an agreement which we both signed and had witnessed. One clause stated that I would be entitled to a 1/6 of his pension to cover the shortfall in my pension caused by a 12 year career gap to have children. We didn't get a consent order at the time and since then I remarried and got divorced again so I know this bars me from claiming anything from my first husband under matrimonial law but I wondered if the agreement could be considered a legally binding contract and whether failure to fulfil that clause would be a breach of contract. My ex did start paying me a nominal amount but has now decided to stop and I want to know if it is possible to condsider this a breach of contract and seek recompense in a court of law.
Susanne - 22-Jul-17 @ 12:39 PM
Izzy - Your Question:
Before entering tenancy with a friend, I want to write up a separate contract stating that they cannot invite a certain person on to the property under any circumstances. Said person has been harassing and the police are aware. If I myself write up the contract stating that said person cannot enter any property I am a tenant of too, is this legally binding? If there is a breach in the contract, would that hold up in court? Any advice would be very appriciated.

Our Response:
In reality the contact has no legal basis at all, as there is little recourse if your friend decides to breach the contract. If your friend breaches it and you apply to court, the contract would not be enforceable. Plus, it would take time to get to court and cost.
ContractsAndAgreements - 21-Jul-17 @ 12:54 PM
Before entering tenancy with a friend, I want to write up a separate contract stating that they cannot invite a certain person on to the property under any circumstances. Said person has been harassing and the police are aware. If I myself write up the contract stating that said person cannot enter any property I am a tenant of too, is this legally binding? If there is a breach in the contract, would that hold up in court? Any advice would be very appriciated.
Izzy - 21-Jul-17 @ 12:14 AM
Tasha - Your Question:
I have emails to both myself and a mortgage company staying my ed husband does not want to fight over the house or want anything from the house. He has now gone back on this 2 years later and is trying to get 50% will the emails hold up in court?

Our Response:
Much depends upon the reasons why he has gone back on his word and whether those reasons are seen to be justifiable.
ContractsAndAgreements - 10-Jul-17 @ 3:31 PM
I have emails to both myself and a mortgage company staying my ed husband does not want to fight over the house or want anything from the house. He has now gone back on this 2 years later and is trying to get 50% will the emails hold up in court?
Tasha - 7-Jul-17 @ 5:26 PM
Hi.. I had a contract with a cleaningcompany which I assumed to be a 12 month one which had expired... I was wrong and it's running... I terminated dealings with the company for several reasons and asked them to leave at the end of the month...they told me I had to pay 2 months severance which I understand having now read the contractbut immediately asked that they then work the 2 months notice period and they refused... I just want to check this is 100% ok... thank you
Cyprus - 26-Jun-17 @ 7:24 PM
MeJulie57 - Your Question:
I'm in a situation where I want to let a room in a house where one person has taken out a contract for the entire 3 bed property through the letting agent. The deposit she paid is in a deposit protection scheme, and I too will pay a deposit for the room (one months rent), however it is preferred that my name is not officially put on the contract with the letting agent. If I form a new and secondary contract that sets out my agreement with the person on the original contract, specifying the terms of my deposit along with my position in the property and we both sign it, does this form a binding enough contract that my position in the property is legally safe and I could persue my deposit if I needed to?

Our Response:
You should be able to find out all you need to know via the CAB link here.
ContractsAndAgreements - 16-Jun-17 @ 12:38 PM
I'm in a situation where I want to let a room in a house where one person has taken out a contract for the entire 3 bed property through the letting agent. The deposit she paid is in a deposit protection scheme, and I too will pay a deposit for the room (one months rent), however it is preferred that my name is not officially put on the contract with the letting agent. If I form a new and secondary contract that sets out my agreement with the person on the original contract, specifying the terms of my deposit along with my position in the property and we both sign it, does this form a binding enough contract that my position in the property is legally safe and I could persue my deposit if I needed to?
MeJulie57 - 9-Jun-17 @ 8:41 PM
Question- I have a legal catering company and my question is this- you met your client and for 3 months been planning her daughter's wedding reception.It is a vegan and non veganmenu for first month 275 people 2 weeks before it is 175. Also i an the event coordinator and planned it all, flowers, decor, bar, be flowersand a total of $50,000. The real problem is this, I have hired my servers they took off from work to work this party. I have done all the paperwork bought a few things, etc. Now the ex husband and father of bride has now told her daughter and exhe has someone to do the food for 15,000. No written contract but a verbal one and emails and text showing I am doing the wedding. What right do I have to collect 1/3 or 1/2 of what would be the catering total. Please help... Mary Kaye
Mary Kaye - 8-Jun-17 @ 4:29 AM
James - Your Question:
I have a slightly complex situation which I'm looking for some clarity on. At the end of my tenancy in Scotland a few months back, I agreed to have some money from my half of the deposit go towards the deposit of someone else who was starting a new agreement at the same address (directly through the letting agents without it coming back to me in between). They had to pay a higher deposit because of the absence of a guarantor. There was a verbal agreement between me and the tenant, as well as a written clause on the tenancy agreement, signed by her, which said her side of the deposit was to be refunded to me. The woman who handled the contract in the letting agents also knew what was going on. I have a photo of the agreement and of course the letting agents have the original copy. My question is, if it's not possible for the deposit protection scheme to return this money to me directly rather than refunding it to her, would this agreement let me chase the money up legally if she refuses to pay it back to me voluntarily? She'll be going back to France when her contract ends.Thanks!

Our Response:
You would be able to make a ‘cross-border’ claim, please see link here, which should hopefully answer your question.
ContractsAndAgreements - 31-May-17 @ 11:13 AM
I have a slightly complex situation which I'm looking for some clarity on. At the end of my tenancy in Scotland a few months back, I agreed to have some money from my half of the deposit go towards the deposit of someone else who was starting a new agreement at the same address (directly through the letting agents without it coming back to me in between). They had to pay a higher deposit because of the absence of a guarantor. There was a verbal agreement between me and the tenant, as well as a written clause on the tenancy agreement, signed by her, which said her side of the deposit was to be refunded to me. The woman who handled the contract in the letting agents also knew what was going on. I have a photo of the agreement and of course the letting agents have the original copy. My question is, if it's not possible for the deposit protection scheme to return this money to me directly rather than refunding it to her, would this agreement let me chase the money up legally if she refuses to pay it back to me voluntarily? She'll be going back to France when her contract ends. Thanks!
James - 30-May-17 @ 3:04 PM
Mints - Your Question:
My husband has recently started new employment where the family business have never given contracts of work out to their small number of employees. Upon picking up his wage slip this month he had a brown envelope papercliped to it. Opening the envelope it had his contract of work enclosed to which he found to be very unfavourable towards him as an employee. He has now been informed because he opened the envelope without it being handed to him he has in effect accepted the terms and conditions of the contract. Could you advise if this is true?

Our Response:
His employer has no grounds to implement this policy. He would need to discuss this with employer directly if the terms in the contract conflict with the terms discussed directly with his employer on acceptance of the job. If he can prove i.e by letter of acceptance, the terms differ then this will work in his favour.
ContractsAndAgreements - 26-May-17 @ 1:49 PM
My husband has recently started new employment where the family business have never given contracts of work out to their small number of employees. Upon picking up his wage slip this month he had a brown envelope papercliped to it. Opening the envelope it had his contract of work enclosed to which he found to be very unfavourable towards him as an employee. He has now been informed because he opened the envelope without it being handed to him he has in effect accepted the terms and conditions of the contract. Could you advise if this is true?
Mints - 26-May-17 @ 11:30 AM
My solicitor has deceived me into verbally agreeing for her to take complete control over my claim. I will not be informed of any, if there are any, offers made by the Defendant and I will not be able to form an opinion on them to discuss the claim and decide whether to accept or decline any offer. Everything will be decided by her. During a meeting which I had requested regarding many concerns I have, I had lots of questions fired at me. I was given no time to think about them, process them and give an informed answer. Suddenly a form was thrust in front of me by a Partner of the Law firm whichI was told to sign. He said for me to just sign and not read it, which I did as I trusted him. He then snatched the form away and immediately concluded the meeting.I do not have a copy of the form and do not know what it contains. The next day my solicitor emailed me stating that she had made an offer to The Defendant and the Court as per our "verbal agreement." I replied saying there was no verbal agreement, I had been deceived and for her to retract the offer. She said the offer was unretractable and there was no deception. A verbal agreement has never been discussed. The reasons why I would should have or want/need one has never been discussed. Terms and conditions have never been discussed. The process has not been open and transparent. I do not need anyone to make decisions for me. I am compus mentis. I said this in an email but have received no response. Initially, I requested the meeting to discuss some concerns that I had, which was refused and only went ahead after I had informed her that I had contacted the Legal Ombudsman. She then agreed to a meeting and that it would be an hour long. During this meeting and without me being aware, apparently a verbal agreement was made. I have had no response to my request that the verbal agreement should be cancelled as it was obtained through deception but have had no answer. That was three weeks ago. Am I within my rights to send another email stating that as I have heard nothing regarding my email re: termination of "verbal contract", to send another email stating that if I receive no response within 4,days , it would be confirmed that the verbal contract is terminated? Not that it could surely be enforced anyway!
Shezza - 17-May-17 @ 1:03 AM
Arw - Your Question:
I had an endowment mortgage that I started nearly 25 years ago and when I bought it, I included on the application form that I required £36,000 minimum and actually wrote minimum alongside the figure at the time of the signing. The seller then decided the payments and I have never missed a payment, About seven years into the payments, then came the endowment shortfall saga that was widely publicised and I started getting the warning letters. I put the company on notice for them to make up any shortfall. As far as I was concerned that word minimum was written into the contract and accepted by both parties.The company told me disagrred and gave me a final letter many years ago. I am looking to take this to the financial ombudsman when I get the final maturity figure this year so that I can place a figure on any shortfall. Unable to do this earlier because I didn't know if there was actually going to be a shortfall and also what the shortfall was going to be.What are my chances of success of claiming the full £36,000 by claiming that at the time of the application, my term "£36,000 minimum" was written into the contract and they took seven years of payments before trying to tell me there was going to be a shortfall.

Our Response:
Please see the Money Advice Service link here which will tell you all you need to know.
ContractsAndAgreements - 5-Apr-17 @ 12:53 PM
I had an endowment mortgage that I started nearly 25 years ago and when I bought it, I included on the application form that I required £36,000 minimum and actually wrote minimum alongside the figure at the time of the signing. The seller then decided the payments and I have never missed a payment, About seven years into the payments, then came the endowment shortfall saga that was widely publicised and I started getting the warning letters. I put the company on notice for them to make up any shortfall. As far as I was concerned that word minimum was written into the contract and accepted by both parties. The company told me disagrred and gave me a final letter many years ago. I am looking to take this to the financial ombudsman when I get the final maturity figure this year so that I can place a figure on any shortfall. Unable to do this earlier because I didn't know if there was actually going to be a shortfall and also what the shortfall was going to be. What are my chances of success of claiming the full £36,000 by claiming that at the time of the application, my term "£36,000 minimum" was written into the contract and they took seven years of payments before trying to tell me there was going to be a shortfall.
Arw - 5-Apr-17 @ 12:47 AM
I am currently in court with a client of mine, I sent a quotation and my terms and conditions are set out below our quote, we completed the works and are now in dispute. My questions are I do not require a signature on our T&Cs, they are just presented under the quotation, are they still valid? My T&Cs have been broken many times, but I have a contract sent via email to the client but I am worried in assuming that because they accepted our quotation does this mean they accepted our terms and conditions
Chris - 16-Mar-17 @ 7:52 AM
J - Your Question:
I broke up with an ex 10 years ago but he owed me money. He's recently been in touch and he agreed over facebook messages that he would repay this debt. Now he's saying he won't and that I gave the money to him. Can I pursue this debt? Is it worthwhile in terms of court and legal fees as he owes £2,000

Our Response:
If you're going to take court action, you must do this within certain time limits. The time limit depends on what action you're taking - eg the time limit for breach of contract is six years. You can see the CAB link here for further information and/or contact your nearest Citizens Advice to find out more about time limits.
ContractsAndAgreements - 2-Mar-17 @ 12:20 PM
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