When it comes to MSMEs, several businesses opt for a handwritten contract rather than a typed contract. In a handwritten contract, the parties to the contract sign the document by their own hand – except in the event a law or regulation states it’s only necessary to obtain the signature of the obligated party.
The Indian Contract Act, 1872
The Indian Contract Act is one of the oldest mercantile laws of our country. It came into effect on the 1st of September 1872 and is applicable in India. The act contains a total of 266 sections, and details the laws relating to contracts in India It is the key act regulating Indian contract law. The Act has been largely influenced by the principles of English Common Law.
According to the act, any legal contract in order to be enforceable by law must contain certain key elements. First of all, it must have an offer (by one of the parties) and its acceptance (by the other party). Then, there has to be something of value exchanged, such as money or a promise, which in legal terms is called ‘consideration’.
Disadvantages of using handwritten contract:
Despite how convenient it can seem to have a handwritten contract, there are several disadvantages of using handwritten contracts. Some of the disadvantages of handwritten contracts are listed below:
Handwritten contracts take time and create confusion:
When you write a proper legal contract, then there are many things that need to be included. A proper legal contract intended to cover the legal bases of one or both parties also leads to delays and possible confusion. A proper contract needs to talk about all possible situations and ways to handle them. This makes a legal contract very long. And writing such a contract by hand becomes very impractical.
2. Mistakes cannot be corrected easily:
In a handwritten contract, if some mistake creeps in, then the mistake cannot be corrected easily. A legal contract with spelling mistakes and cutting would look very unprofessional to your client. The only option to avoid such mistakes is to rewrite the whole document again, which is very cumbersome.
3. Issues with handwriting:
Not everybody has good handwriting. A handwritten contract, if written by someone with handwriting, which is illegible, then it becomes very difficult to read that contract.
4. Professional look:
All said and done, a nicely typed document looks much more professional as compared to a handwritten contract.
The proper way to sign a contract so that it is valid and enforceable
When you agree on the final terms of any legal contract, it’s time to sign the dotted line. For many people, signing a contract is just a formality. But one should be very careful before signing a legal contract. Following are steps required to be followed when signing a contract:
Ensure the contract you are signing is the contract you agreed to sign:
If a contract draft has gone through multiple rounds of modifications, then it becomes very imperative to read through the final draft carefully before signing it. Be sure that you fully know and understand each sentence of the agreement.
2. Ensure that a contract should be properly dated:
While it’s not a legal requirement to date a contract, it’s advisable to date it, as it may help at a later stage. Sometimes an agreement is valid for a particular period. In such cases, putting a date on agreement gives an idea about its expiry.
3. Ensure last-minute changes to the contract are initialed:
Though, the ideal way is to ensure that all changes are done before taking the final print. But sometimes there are some last-minute changes, and there is no time to take a fresh print. In such cases, the changes should be made by hand and both parties should approve the changes by putting initials against the changes.
4. Parties must sign a contract in their correct capacity:
When a person signs a contract, because of his designation in any organization, it’s important that he properly identifies his designation and that he is signing on the organization’s behalf. This later frees the person of any personal obligations.
5. Ensure both parties are authorized to sign the contract:
While you get a contract signed by a client, ensure that the person signing the agreement is capable of signing the contract and has proper authority to do so. Naturally, you would want to land into a situation, where your client claims that the contract was signed by someone who was not authorized to do so. So, they need not abide by the contract.
6. Keep an original signed copy in your records:
After the agreement is signed by both parties, it’s important that both parties keep a signed copy of the agreement in their respective custody. If required, get two copies of the agreement signed, and both the parties should keep a copy to avoid issues later in case of any dispute.
What is considered to be a valid contract?
The basic elements required for a contract to be legally enforceable are – mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. In some states, the element of consideration can be satisfied by a valid substitute. Possible remedies for breach of contract must include general damages, consequential damages, reliance damages, and specific performance.
A handwritten contract is legally binding and enforceable in court as long as it spells out specific details and both parties have signed that they agree to the contract’s terms. If someone is trying to breach your handwritten contract or you are questioning the legitimacy of a handwritten contract you have signed, you can consult a legal practitioner. While handwritten contracts are generally enforceable, there may be instances under the law they are not. In reality, a handwritten contract has many practical challenges. Contract drafts are normally lengthy, may involve some editing or corrections, etc. Doing that in a handwritten contract is not possible. Finally, a well-typed legal contract looks legible and professional as compared to a handwritten contract.