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Acceptance by conduct: no signature required

In the recent case of Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443, the Court of Appeal contemplated the question of whether a binding contract had been formed even though one of the parties had not signed the document.

Background

The case concerned negotiations for a licence to allow a UK cookware distributor, Anotech International (UK) Ltd to market its products under the Masterchef US brand owned by US television company, Reveille Independent LLC (Reveille). The terms of the negotiations were set out in a short form document (deal memo) with the intention of replacing the deal memo with long form agreements.

The deal memo expressly stated that it would not be binding until signed by both parties. Anotech hand amended and signed the deal memorandum and returned it to Reveille, but Reveille never signed it.  When negotiations over the long form agreements subsequently broke down, Reveille sought to enforce the terms of the deal memo to recover money due.

Decision 

The Court of Appeal took the view that there was clear evidence of acceptance of the terms by both parties. It is established law that a party can waive a prescribed mode of acceptance by accepting in a different way, provided that the other party is not prejudiced as a result. In this case, Reveille had waived the signature requirement through its conduct and Anotech had not been prejudiced since it had received all of the benefits under the deal memo. 

Implications

The case illustrates that the parties' conduct can override any signature requirement included in a contract. 

In order to avoid any uncertainty over whether an unsigned document is binding, it is obviously advisable to ensure that documents are signed by both parties.

If you do not wish to be bound by a short form agreement pending negotiations of a long form agreement, you will need to make it clear to the other party that your actions do not constitute acceptance by conduct. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.


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