Must a contract be in writing, signed or witnessed?

The legal position

No general requirement of form. A contract may be made in any form, including by conduct alone. Where the parties act upon an unsigned draft agreement over a period of time, the law may treat the terms of that draft as their contract. That may be so, for example, where orders are placed, goods are delivered and invoices are paid in accordance with it. A signature is sufficient evidence of assent, but it is not always necessary.

Where writing is required:

• Land. The contract, or a memorandum or note of it, must be in writing and signed by the party to be charged (that is, the party against whom the contract is to be enforced) or by a person lawfully authorised by that party (Conveyancing and Law of Property Act, s 4). The memorandum must identify the parties, the property and the price, together with the other agreed terms. Separate documents may be read together to constitute the memorandum, provided that the signed document refers to the others.
• Guarantees. The guarantee, or a memorandum or note of it, must be in writing and signed by the guarantor (Statute of Frauds 1677, s 4).
• Goods of the value of $100 or upwards. Writing is required only where none of the other conditions of s 6 has been satisfied. The contract may be enforced by action if the buyer has accepted and actually received part of the goods, has given something in earnest to bind the contract, or has made a part payment. Where none of those has occurred, there must be a note or memorandum of the contract in writing, signed by the party to be charged (Sale of Goods Act, s 6).

Signature by both parties. Where writing is required, the signature that matters is that of the party against whom the contract is to be enforced. An ordinary contract may be binding although the document recording it was never signed, if both parties have acted upon it.

Electronic writing and signatures. A legal requirement of writing may be satisfied by an electronic record. A requirement of a signature may be satisfied by an electronic signature that meets minimum standards of reliability and integrity, or a standard the parties have agreed (Electronic Transactions Act, ss 9, 30 and 31). The matters excluded from these provisions include wills, conveyances and transfers of interests in property, trusts, powers of attorney and negotiable instruments (s 6).

Deeds. A promise made by deed is binding without consideration. Certain instruments are subject to additional formalities, such as attestation by a witness, notarisation, or execution under a company's seal.

Practical implications

The absence of a signature does not of itself prevent a contract from binding the parties. Nor is attestation by a witness a condition of the validity of an ordinary contract.

Stamping is a distinct matter. Certain instruments, such as conveyances and leases, attract stamp duty. An instrument that is chargeable with duty but has not been duly stamped cannot be given in evidence in civil proceedings until it is stamped (Stamp Duty Act, s 22(5)).

A document signed by one party only may bind that party. In a sale of land, a letter signed by the vendor may, when read together with other documents, supply the necessary memorandum.

An oral agreement for the sale of land presents the greatest risk. In the absence of writing signed by the party to be charged, the court will not enforce it, save under the narrow doctrine of part performance. That doctrine requires acts which point unmistakably to the existence of a contract, such as the purchaser being let into possession. The payment of money is not usually sufficient on its own.

Notarisation is required only for particular documents, not for contracts generally.

Recommended steps

Any agreement of significant value should be recorded in writing and signed. The document should state the correct names of the parties; in the case of a company, the name should be verified against its certificate of incorporation rather than its letterhead. It should also state the obligations of each party, the price, the dates for performance, and the consequences of non-performance.

A document should never be backdated. It should bear the date on which it is actually signed, since a false date of signature may amount to fraud. Where the agreement is intended to take effect from an earlier date, that should be stated openly in an "effective date" clause.

Electronic signatures are appropriate for ordinary commercial contracts. Instruments concerning land, powers of attorney, and documents intended for registration should be executed on paper, and advice should be taken on the formalities required.