Are handwritten contracts legally binding?
Handwritten contracts are legally binding if they meet the necessary conditions that apply to all contracts: mutual agreement, capacity, consideration, and legal validity.
There are no legal differences between typed and handwritten agreements when it comes to enforceability.
When most people think of a contract, a formally typed, the professional contract usually comes to mind. Nonetheless, a handwritten contract can be as valid as one that’s typed.
Handwritten agreements are somewhat impractical compared to typed versions. However, they are fully legal if written and formatted properly, and are preferable to verbal contracts in practically all cases.
In this article, you’ll learn the basics of contract law and find an answer to the question: is a handwritten contract legally binding?
Written contracts vs. verbal contracts
A written contract, i.e. a contract that is typed, printed, or handwritten, is not necessarily more valid than a verbal one that has only been stated orally.
If the correct procedures are followed, and the conditions of the contract are commensurate with current law, then a lot of businesses could feasibly use verbal contracts for many of their operations.
However, this doesn’t mean that oral agreements are as good as written ones.
There are many reasons why written contracts should be favored when conducting business, the most obvious being that it’s difficult to prove what was agreed upon or when a breach of contract occurs if no documentation physically exists.
Legal issues are much less likely to arise if a written contract is used instead of a verbal one.
Advantages of using written contracts
When compared to an oral contract, there are several reasons to use a written format, either typed or handwritten.
Here are several benefits of written contracts:
- Verbally-stated terms could easily be misunderstood or even forgotten by any of the parties.
- It’s easier for someone to lie about the original contract if it was only orally agreed upon.
- One or more of the parties could potentially go into administration or cease trading for any reason halfway through the contract.
- There are several types of contracts that have to be in writing for them to be recognized as legally valid.
- Using written documentation makes the negotiation process easier, especially if there are numerous counteroffers.
For these reasons and more, it’s always a good idea to have your business agreements in writing, especially if you run a small business where financial resources are limited and the risk of legal proceedings is best avoided.
Written contracts give you a reliable set of terms, obligations, and outcomes that you can easily argue in court if need be.
An oral agreement is difficult to prove, so if you end up in court over a contract dispute, you don’t want to rely on a conversation you had a year ago as evidence of an enforceable contract.
The Statute of Frauds and how it affects written contracts
As mentioned above, some kinds of agreements need to be in writing to be legally valid. This is dictated by the Statute of Frauds.
State law varies, but the Statute of Frauds means the following agreements need to be in writing:
- Leases lasting more than one year.
- Sale of something over a stated maximum value.
- Any transfer or sale of real estate.
- Contracts lasting beyond a party’s death.
- An agreement for someone to pay someone else’s debt.
The law may state that these types of contracts need to be in writing, but it doesn’t usually say anything about them having to be typed.
This means that a handwritten contract is a valid contract in the eyes of the law, although you should always seek legal advice and check your state’s laws.
Reasons not to use handwritten contracts
If handwritten contracts are typically legally binding, why wouldn’t you use them? Well, the main drawback is how impractical it is nowadays to have someone write an entire contract by hand.
Mistakes can’t be edited easily, and they won’t look anywhere near as professional to a potential client or customer as a nicely-typed document.
Producing a legal contract is far simpler today than in the days when handwritten contracts ruled.
Many companies now offer software specifically designed to make contract and business document creation, signing, and sending easier.
Solutions such as PandaDoc’s contract management software allow users to build custom documents from a template library.
The cloud-based interface supports drag-and-drop additions of useful elements like pricing tables, signature fields, images, videos, and more.
eSignatures can be added with a simple click, contracts can be sent out for signing just as easily, and their status can be tracked right within PandaDoc.
This certainly beats handwriting every contract from scratch.
Legal but not practical
Handwritten contracts are becoming obsolete. Only a small handful of organizations still routinely use them.
We suggest using typed contracts to conduct your business affairs and recommend specialized software to create professional-looking, legally binding contracts in a matter of minutes.