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Saturday, January 14, 2017

When is a signature on a contract non-binding?

It is not often we get to deal with antiquity in law -- so this was a great question recently posted on a legal bulletin board.

I signed up for a loyalty program. I then switched to another product not in the program. The loyalty company sent a letter and bill for 30,000 to "complete my commitment with them" Under the line I signed it say "this is a non-binding signature". Do I have to pay them?

This is an interesting case. Without reading the contract, it is hard to say what the terms and conditions of the loyalty program are (were?). You need to call us to discuss the contract -- and then I can provide a legal answer as to the level of liability/exposure you face. That aside, the case is interesting for its historical context. You wrote "non-binding signature" (or was that pre-printed?). In days of yore, a seal indicated that the signature had been verified. This was especially important in the age of wax stamps and individuals who could not read or write. A "sealed" document had its statute of limitations increased from the typical three years to five or even twenty years, and prevented the "sealed" signature from being contested as false or forged. In Virginia, the code for this is 8.01-246, and a "seal" is not required, and the period to bring an action in a contract case is consistent whether there is a seal or not.

In modern contract law, wording such as "non-binding" (or "(seal)") really only opens you up for protracted litigation. Under commercial contract regulations, any intent to enter into a contract can be used to indicate acceptance of terms and conditions in return for some kind of benefit. Signatures may not be required, if consent can be presumed from your acceptance of some benefit (for example, placing an order on the phone, and receiving the goods would obligate you to pay for the items ordered, even if you didn't sign anything). Conversely, indicating you refused to be bound by terms would arguably act as a rejection to the terms of the agreement. So, it's murky.

Do you have a question about contract law? Call us! We handle trials and contract negotiations in DC, VA, and MD.
Hanover Law, PC
Offices in Fairfax, VA and Washington, DC
2751 Prosperity Ave, Ste 150
Fairfax, VA 22031
Sean R. Hanover, Esq.
Stephen Salwierak, Esq.
Charlet Herr, Practice Manager

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