Most people assume that if you've signed something, you're bound by it. This is mostly true — but not always. UK contract law has specific requirements for a contract to be legally binding, and understanding them can be genuinely useful.
The four requirements for a valid contract
1. Offer
One party makes a clear, definite offer to another. An offer must be specific enough that acceptance of it would create a binding agreement. Invitations to tender, advertisements, and price lists are generally not offers — they're invitations to treat, meaning an invitation for the other party to make an offer.
2. Acceptance
The other party accepts the offer unconditionally. Any change to the terms of the offer is a counter-offer, not acceptance — and a counter-offer kills the original offer. This is important in contract negotiations: responding to an offer with "yes, but..." is legally a rejection of that offer.
3. Consideration
Both parties must give something of value. In a typical commercial contract, this is money in exchange for goods or services. Consideration doesn't have to be equal — you can sell something for £1 if you choose — but there must be some consideration on both sides. A promise to give a gift, with nothing given in return, is not enforceable as a contract.
4. Intention to create legal relations
Both parties must intend for the agreement to be legally binding. Commercial agreements between businesses are presumed to have this intention. Social or domestic agreements (agreeing to meet a friend for dinner) are presumed not to. This presumption can be rebutted by evidence.
What about formalities?
Most contracts in the UK can be verbal — there is no general requirement for a contract to be in writing. However, certain contracts must be in writing or executed as a deed:
- Contracts for the sale of land
- Guarantees and indemnities
- Consumer credit agreements
- Certain insurance contracts
Employment contracts must be evidenced in writing (the employer must provide written particulars of employment), but the contract itself can be verbal.
Can you get out of a contract?
Yes, in some circumstances. Contracts can be set aside for misrepresentation (if one party made a false statement that induced the other to contract), duress, undue influence, or mistake. They can also be void or voidable for other reasons including illegality.
But generally, a contract you've freely signed with full knowledge of the terms is binding. Which is why it's worth reading before you sign.
This is why AI contract review matters: most people sign contracts they could legally have negotiated, because they don't know what the clauses mean until it's too late.
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