Unsigned Contracts

A particular situation often faced by parties to a dispute is one where the underlying contract which dictates the terms on which the parties are arguing is either partly signed, or worse, not signed at all. It is important to consider the enforceability of such agreements.

When considering case law, the question as to whether an unsigned contract is enforceable, may be answered as follows- 

Aside from various types of legal documents where the signature of the parties is required by law, it is not required that an ordinary agreement that is documented in writing must always be signed by the contracting parties in order for it to create binding obligations between them. However, proving that the contracting parties have reached consensus in a written agreement that has not been signed places a high burden of proof on the claimant. 

In Cell C (Pty) Ltd v Zulu 2008 (1) SA 451 (SCA), Cell C provided Zulu with Cell C’s standard contract, which was subsequently signed by Zulu but was not returned to Cell C. Prior to signature by Zulu, Zulu had paid certain amounts to Cell C and then, following signature by Zulu (but not Cell C), Cell C performed their obligations in terms of the contract while Zuma did not. Cell C deemed this to be a breach of the agreement, thereby terminating the contract. 

The court found that through their respective performances (payment by Zulu and delivery by Cell C), the parties had entered into an ‘interim’ agreement, which would only be superseded by the written agreement upon signature thereof by both parties. Cell C was accordingly not entitled to immediately terminate the agreement, as it had not given reasonable notice of termination to Zulu, which is the period of notice required in respect of contracts whereby notice periods in respect of termination are not catered for. 

In Roberts v Martin 2005 (4) SA 163 (C), the court held that an unsigned agreement which had been drafted by the Respondent’s attorneys constituted an offer by the Respondent which the Applicant had accepted by signing the agreement. this meant that the party drafting the agreement would not be required to sign it thereafter.

Applying these principles to the facts of the Zulu case, one might argue that because Zulu had signed the contract provided to him by Cell C, the parties had reached consensus even despite Cell C not having signed the contract, because it is nonsensical to consider that Cell C should not be bound to a contract for which it was solely responsible for drafting. 

The precedent that is accepted by our courts was established in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) which states - 

'(W)here there is a dispute as to the facts a final interdict should only be granted in notice of motion proceedings if the facts as stated by the respondents together with the admitted facts in applicant's affidavits justify such an order... Where it is clear that facts, though not formally admitted, cannot be denied, they must be regarded as being admitted.' 

Where proof of the existence of an unsigned agreement cannot be inferred from the conduct of the contracting parties, for example, through performance of their respective contractual obligations, it might nonetheless be evidenced by their communication prior to such performance. It is clear that an agreement has come into effect, for example, where a draft agreement is sent by email from one party to the other who thereafter agrees to same without further comment. 

However, it is important to note that if a party’s response to the above email were to amount to a counter offer, in other words, it attempts to amend the agreement rather than accept it in its current state, then in such circumstances, it is presumed that in doing so, it would constitute a new offer which is open for acceptance or rejection by the then receiving party. 

Therefore, although signature of an agreement by all the contracting parties thereto is not critical to its validity, a party may face great difficulty in attempting not only to prove the existence of the unsigned agreement, but even where such an agreement can be proved, what the precise terms of that agreement were in absence of certainty.

prepared by Hinrichsen Attorneys Inc.