What Makes up a Legally Binding Document?

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A document that two or more people sign and notarize is legally binding and is one form of agreement that can be upheld in a court of law. In fact, any agreement between two parties can be enforced legally, whether the contract made was verbal or written.

 

However, a signed document is valuable proof that such an agreement exists and that both parties have agreed to the same terms. In the absence of such a document, it’s difficult to determine exactly which conditions were agreed upon in the event the two parties remember the terms differently.

 

The document that describes the agreement is your contract. When both parties fully understand and agree to the terms outlined in that contract, each will signify his or her acceptance by signing it. Even if the agreement has not been notarized, the signatures alone legally bind both parties to the terms in the contract,

 

Having the contract notarized provides evidence that each party actually signed the document. Since a notary must witness the signatures, no one can claim that his or her signature was forged or otherwise illicitly obtained. Furthermore, the document bears a notary’s mark and seal. A notarized document is a more secure way of signing the contract, but the contract itself is still legally binding with or without being notarized.

 

Wording your document is another story, however. Once signed, this document becomes the entire scope of the agreement. If something is not included in the document, it does not exist in the agreement. The wording does not make the document more or less legally binding, but it does clarify exactly what you are legally bound to do.

A vague or poorly worded contract leaves room for interpretation, and more dangerously, misinterpretation.

 

Regardless of poor or inadequate wording, the contract is still legally binding and can be enforced by a court of law, but in court the judge must interpret the terms that were documented. Without clearly written terms and details, the judge may construe them differently than you originally intended them. More specific terms create less chance that a judge would favor the opposing party’s portrayal of the agreement over yours.

 

A good contract will describe in detail the offer, the acceptance of the offer, the value or payment to be exchanged for the offered product or service, and the timeframe in which the transaction will take place. The more clearly each of these items is documented in the contract, the easier it will be to enforce the terms in court.

 

If you are creating your own contract without the advice of a lawyer, make your wording clear and easy to understand. Do not try to add fancy legal or Latin terms unless both parties fully understand them and their legal ramifications. Contracts do not need to be fancy or use long, intricate words and phrases to be effective. The most effective contract will demonstrate that both parties entered into the agreement in full understanding of each of the terms set forth.

 

One point to note, however, is that no matter how well worded your contract is, and no matter how specific the terms, if the contract involves any type of illegal activity, it is not enforceable in court. No party can make a contract to break the law.

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