What is genuine agreement?

Every formal business relationship is underpinned by a contract. These documents are needed to enforce the terms of an agreement.

But they require the total consent of both parties. For a contract to truly be above board, genuine agreement is needed.

But what is genuine agreement, and why is it important? Well, let’s discuss that and more below.  

What is genuine agreement in contract law?

Let’s look at the definition of genuine agreement.

A genuine agreement is vital to a fair and lawful contract. Imagine that a contract has been signed.

On paper, both parties have reached an agreement. But has this outcome been achieved fairly? 

A contract can only be described as a genuine agreement if: 

• No physical threats were used to force agreement from either party. 
• No foul play or pressure occurred before or during the signing. 
• No other forms of interference were involved. 

In other words, both parties’ consent must be authentic for a genuine agreement. 

Why do you need genuine agreement?

There are many reasons why genuine agreement is essential.

First and foremost, it ensures fairness for all parties. It adds credibility to your contract, showing no underhanded tactics were involved.

A genuine agreement also demonstrates complete consensus between all parties. 

A contract can be labeled as ‘void’ if a genuine agreement isn’t reached. In other words, participants can back out and cancel it. 

Once a contract is signed, it is legally binding for both parties. However, if it is later found not to be a genuine agreement, it will not be binding. 

Is a genuine agreement legally binding? 

Does reaching a genuine agreement make your contract legally binding?

The process isn’t quite as simple as that.

Genuine agreement is essential for a legally binding contract, but it’s not the only thing you need. 

Below are listed some contract elements essential to ensuring a legally binding document. 

• Consent: Consent can be gained in several ways, including verbally. The most effective and provable form of consent, however, is written. 
• An offer: A clear description of the offer between one party and another. It describes an action that will be taken (or not). 
• Considerations: What is each party bringing to an agreement? This doesn’t always mean financial considerations. A party may be committing to carry out or avoid carrying out a specific action. 
• Obligations: What is expected of each party? Does each party have equal leverage? 
• Competency: Are all parties capable of giving consent? This excludes people under the age of 18 or those who have limited mental capacity. 

What is duress?

Duress is when pressure is applied to force someone to act against their interests.

In this scenario, duress means forcing a party to add a signature against their will.

Duress is dangerous and highly illegal. It can fall under three different forms. 

Physical duress

As the name suggests, physical duress is the use of violence or the threat of violence to obtain agreement.

To be classed as physical duress, an action must fulfill the following: 

• A party is threatened with bodily harm or death. 
• The party believes that a threat is credible. 

An example of physical duress 

An individual being forced to hand over the rights to a property they own.

They have agreed to sign a contract, but only after being threatened with physical violence.  

Economic duress

Economic duress occurs when financial pressure is used to force a party to sign a contract.

One party may threaten to terminate an existing contract unless a new agreement is signed. 

An example of economic duress 

An employer wants an employee to sign a new employment contract. The employee signs after being told that they will be fired unless they agree.   

Duress to goods

It’s important to remember that physical duress doesn’t just apply to bodily harm.

Duress to goods is a form of physical duress. It involves damaging or threatening to damage the property of a party if they do not sign a contract. 

An example of duress to goods 

A landlord wants to enforce a new lease agreement.

They make a veiled threat against the tenants’ belongings if they do not sign.  

Improve your credibility with genuine agreement

By now, you should have a better idea of what genuine agreement is.

Before signing any new contracts with a party, ask, ‘Has complete agreement truly been reached?’. Consider your practices in getting a party to sign.

Has everything been above board? Any action that can be counted as duress can land you in hot water. 

Remember, too, that reaching a genuine agreement is a legal requirement.

But it isn’t the only factor in ensuring your agreement is legally binding. Always seek legal advice before finalizing any contracts. 

A genuine agreement is the first step to a credible contract.

If you ensure that all parties have reached a genuine agreement before signing, you’ll have a contract in which you can be confident.

Want easy, stress-free access to an agreement document? PandaDoc’s agreement templates are a great place to start.