Fact Checked

What Makes an Agreement a Legal Contract?

Lori Smith
Lori Smith

A written legal contract is an agreement between two or more individuals. In order for a contract to be considered lawfully binding, it should be signed by each person to whom the contract applies. Specific terms about what the parties agree to, as well as the penalty or consequence for a contract breach, should be included within the language. While both written and oral agreements are considered legally-binding, it can be difficult to prove an oral agreement in court, since there is seldom evidence. A signed, written contract will ensure that all parties understand the expectations.

First and foremost, for a contract to be legal, it must be signed by all parties. Usually, the signatures are located at the very end of the document, along with the date it was executed. It is a good idea to have it notarized by a registered notary public, which proves that the signatures belong to the intended parties. Witnesses, if present, may also sign it.

All parties must sign a contract for the document to be legally binding.
All parties must sign a contract for the document to be legally binding.

While the absence of a notary or witness signature might not affect the validity of the contract, it can influence the outcome of a case, if one party were to challenge its authenticity. Except for the final signature page, all other pages should be initialed. This is to confirm that everyone is agreeing to the same terms.

Any changes to the original text should also be initialed at the location the change takes place. In other words, if the second paragraph is crossed-out, both parties would initial along the margin of that passage. A legal contract proves agreement by all parties on all issues. Initialing changes acknowledges that understanding.

Signing a contract makes an agreement legally binding.
Signing a contract makes an agreement legally binding.

The front of the contract should be titled to specify the purpose of the contract. This is done for clarity, but also in case one party needs to reference the agreement in court. For example, if the contract is an agreement for one person to perform as a photographer for another’s wedding, the contract might be titled “Wedding Photographer Agreement,” or something similar. It is also important to clearly state the first and last names of the people who are parties to the contract on the first page. These are the individuals that must sign the agreement.

Agreements are sometimes notarized by a notary public.
Agreements are sometimes notarized by a notary public.

The document should include the date it becomes effective and the date it terminates, along with any provisions for how the agreement could be canceled early. Clearly stating the expectations of each party is very important. It should also contain a section that describes the consequences in case there is a breach in the contract, which can include who will pay attorney fees or even which court jurisdiction will handle disputes. The more information contained within the document, the better. Anything omitted could be left open to interpretation for a judge to decide later.

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Discussion Comments


My landlord gave me an eviction letter that I did not sign. No one has received copy signed by me. Is it binding in a court of law?


What about a binding contract with two parties, and the other party did not initial one of the paragraphs. They did sign the contract. What is the result of the contract?


I bought a car from an individual recently. I tried checking it and noticed some things, but they weren't deal breakers. When I asked about the emissions, the seller said it was good and everything. When I agreed, I came back later to get the cash money to buy it. She then had me sign a document saying:

"I am selling a light green, four door, year 2003 nissan altima wich(which is misspelled) has 163084 miles on it to (my name) on the day -- buyer. vehicle will be sold as the condition it is, at the amount of 3800. after purcharge(misspelled again) I will not take any resposabilities(misspelled) to whataver(misspelled) happens to this car after I recive(mis.) the amount above and this contract is signed by purchaser. Buyer understand the conditions and averythig(mis.) written under this contrac(mis)."

That same day, two hours later, I did do the emissions and it failed. The clean air act says in this county that no person or individual can sell a used car unless such vehicle has a valid, passing certificate of vehicle emission inspection at the time of sale, which this vehicle did not have. Is the contract still binding considering she failed to have a passing emission certification, seeing as she was not supposed to sell this car because it failed the emission test?


If the date of execution of an agreement and date of the signature agree that agreement is posted on that date, then will that agreement be legal and binding in nature?


My parents agreed to help me with the down payment on a condo. Now, they had me sign a promissory note with the following conditions: "I, CMG agree by signing this promissory not that I will reimburse my father, CGM or to his wife IBM is he is deceased the sum of $25000, which was/will be used to make a down payment on the residence listed below and to pay bills if I remarry NG or allowing his to remain overnight in said resident, the resident will be sold to reimburse the $25000 to CGM or his wife. Any and all legal fees associated with the selling of said property listed below will be paid by CMG. If the conditions set forth in the promissory note are met the $25000 is to be considered a gift to CMG."

I added the following: "On June 7th at address (left out for privacy)IBM stated that she would pay for a moving company, yet to be named, to come to (current address) and have then pack up all belongings of CMG and pay to have them delivered and unloaded at (new address)". This document was signed under duress. The copy I have has been signed by me and my father with my sister as a witness. The space where my mother was to sign is blank. This promissory note basically states that for the rest of my life I can never reconcile with my ex-husband. Is this a legal, binding promissory note?

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    • All parties must sign a contract for the document to be legally binding.
      By: lenets_tan
      All parties must sign a contract for the document to be legally binding.
    • Signing a contract makes an agreement legally binding.
      By: corepics
      Signing a contract makes an agreement legally binding.
    • Agreements are sometimes notarized by a notary public.
      By: Iurii Sokolov
      Agreements are sometimes notarized by a notary public.