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A contract is a legally binding document that is enforceable through the law. At its very core, a contract is a promise to perform a specific task. There is always an exchange of something of value in a contract – whether that be money, services, or another benefit. For a deeper insight into the legal principles underpinning contracts, you might also want to check our comprehensive guide.
Usually, this task will be performed in exchange for something of value (the most common form being money). However, contracts can also involve non-monetary exchanges that bind the parties to particular obligations.
There are several essential elements that transform an agreement into a legally binding contract. Before you go ahead and sign any document, it is crucial to ensure that the document meets these legal standards and that you can enforce it, especially as we move further into 2025.
What Makes A Contract Binding?
In order for a document to qualify as a contract, it must contain the following fundamental elements:
- Offer and acceptance: There must be a clear proposal by one party, and an unambiguous agreement to that proposal by the other – a process that we discuss in more detail in our piece on what constitutes legally binding agreements.
- Consideration: Each party must receive something of value. The most common form of consideration is money – for example, you provide goods or services and in return, receive a payment. For further clarity on this principle, our article explores this concept in-depth.
- Capacity: The signee must have the legal capacity to consent, which includes being of the appropriate legal age and possessing full mental capability to understand the terms.
- Intention to be legally bound: All parties must enter the agreement voluntarily with the intention that it results in legal obligations.
Moreover, the contract must not include any clauses that are illegal or deemed as unfair contract terms – those provisions that grossly favour one party over the other may render the contract void and unenforceable.
It is important to note that in 2025, technological advancements have enhanced transparency and record-keeping, making it even more critical to ensure that all contractual elements are precisely documented to withstand any legal scrutiny.
Are Verbal Contracts Valid?
Verbal contracts are valid, however, they are considerably harder to enforce because there is no tangible evidence of the agreement. In 2025, digital technologies such as recorded telephone or video calls can provide supporting evidence, yet written contracts remain the gold standard to confirm the parties’ intentions.
| Example Violet is a wedding photographer. Henry meets Violet while she is photographing his friend’s wedding and enquires about her services for his own wedding later that evening. They agree on a package deal Violet offers, discuss the desired shots, dates, time, venue and all other relevant details. A few days later, Henry transfers the deposit they agreed upon. Unfortunately, a few days before the wedding, Violet is involved in a serious accident and is unable to attend. Although Henry manages to secure a last-minute replacement, when he later requests the return of his deposit, Violet’s business partner, Steven, contends that without a written contract, they cannot refund the money. The dispute escalates and legal advice is sought. The likely outcome would favour Henry; despite the absence of a written contract, the payment of the deposit demonstrated an intent to be legally bound, thereby enabling Henry to recover his funds. This scenario underlines how, even in a verbal agreement, the actions of the parties can lend weight to its enforceability. |
Regardless of whether a contract is verbal or written, it must adhere to the universally accepted guidelines of forming a valid contract.
How Do I Sign A Contract?
Before signing any contract, there are several important factors you need to verify to ensure that your agreement is both valid and enforceable.
Legal Age
A person must be a legal adult to sign a contract on their own behalf. A minor, defined in the Births and Deaths Registration Amendment Act (No 1 of 2002) as someone under the age of 18, is generally not considered to have the capacity to enter into a contract. This is a critical factor when considering the enforceability of any agreement.
While minors may occasionally enter into contracts, they retain the right to repudiate such agreements if proper notice is provided. It is advisable to review the detailed discussion on the legal age requirements for signing contracts to ensure compliance.
Capacity
In addition to legal age, the individual signing the contract must be in a sound mental state to fully comprehend the terms and implications of the agreement. For example, a contract signed by a heavily intoxicated person is unlikely to be enforced, as the capacity to consent is impaired.
If someone suffers from a condition that impacts their cognitive ability, they might not fully understand the document they are signing, rendering the contract invalid. Detailed guidance on this subject can be found in our resources on capacity and contract law.
Witness
Many contracts require the signature to be witnessed. To qualify as a witness, an individual should generally meet the following criteria:
- The witness must be a legal adult (over the age of 18).
- They must be present at the time the contract is signed.
- They should not be a party to the contract.
Some contracts may have additional requirements regarding the witness, such as needing to have known the signee for a specified period, or even maintaining a degree of independence from the parties involved. Additionally, modern practice now allows for electronic witnessing, which can be especially useful in remote transactions.
Date Signed
For a contract to be valid, it must be dated on the day it is signed. Typically, the contract is enforceable from the date of signing unless the agreement specifies otherwise.
What If I’m Signing As A Company?
A company is recognised as a separate legal entity and therefore has the power to enter into contracts. When signing on behalf of a company, the individual must be duly authorised – usually this is one or more directors or, in some cases, a company secretary who is also a director. The company’s Articles of Association will specify who holds this authority, and for further assurance, you might review our guide on company set-up.
What Are Some Types Of Contracts?
Contracts exist in almost every commercial relationship. Businesses utilise them to safeguard interests and ensure smooth operations. From internal policies and company documents to shareholders agreements, vendor contracts, and standard form contracts, a wide variety of legally binding documents are used. These documents formalise arrangements by linking agreed terms to potential legal consequences down the line.
Modern commercial practice in 2025 has seen more specialised contracts emerging to address digital transactions, intellectual property rights, and online service agreements. These include detailed clauses to cover data protection and cyber security – areas that are increasingly crucial in today’s fast-paced business environment.
How To Sign A Contract Electronically
E-signatures are not only valid but are also an increasingly preferred method in 2025. They eliminate the need for all parties to be physically present and reduce the risks associated with mailing sensitive documents. With enhanced digital security measures, e-signatures offer both convenience and a high level of protection against tampering.
At Sprintlaw, our members benefit from unlimited access to our exclusive e-signature tool, ensuring a smooth and compliant transaction process every time.
Is It Valid To Initial A Document?
Initialing a document is typically carried out before the formal signing of an agreement. It is often used during the negotiation and drafting stages to signal that an individual has read, understood, and agreed to the content on a particular page – such as the financial details in an insurance agreement. However, initialing is not a substitute for a full signature.
This preliminary action helps to confirm that all parties are on the same page before the final, more critical step of signing the contract.
What Other Contract Services Might I Need?
In the course of running a business, you will likely require a variety of contracts and agreements to operate efficiently. At Sprintlaw, we offer an array of contract packages tailored to your business needs. Whether it’s casual employment contracts, executive employment contracts, or Sub-Contractor Agreements, we have you covered. In addition, you can access custom Non-Disclosure Agreements and business sale agreements crafted to protect your interests.
In today’s digital age, efficient contract management is vital. Cloud-based solutions and digital archiving have transformed how businesses store and manage contractual documents. For further insights on safeguarding your legal documents and streamlining your processes, consider checking out our guide on online business privacy.
Key Takeaways
There is much to consider when it comes to contracts, as they are among the most varied elements of law. From ensuring the basic elements of offer, acceptance, consideration, capacity and intention are present, to keeping abreast of the latest digital signing practices, understanding contract law is essential for protecting your business interests in 2025 and beyond.
What’s Next?
If you would like a consultation on your options moving forward, please reach out to us on 08081347754 or email [email protected] for a free, no-obligation chat.
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