We are asked to sign documents all the time. Most are relatively routine, from accepting terms when purchasing a service to signing paperwork connected with everyday transactions. However, some signed documents can create significant obligations that last for years or have serious legal and financial consequences.
If you are presented with a legal document, you may wonder whether you really need a solicitor to look at it before signing.
There is no rule that says every legal document must be reviewed by a solicitor. However, signing something you do not fully understand can be risky. Once an agreement is legally binding, discovering that its terms do not mean what you thought they did will not necessarily allow you to walk away from it.
At AFG Law, our solicitors advise individuals and businesses across a wide range of legal matters. Whether you are entering into a property agreement, commercial arrangement or another significant legal commitment, taking advice before you sign can often prevent much more complicated problems later.
Does Signing a Document Make It Legally Binding?
Potentially, although whether an agreement is legally binding depends on more than simply whether somebody has signed it.
Different types of documents and agreements have different requirements for being legally valid. The terms, circumstances in which the agreement was made, intentions of the parties and formalities required for that particular type of document can all be relevant.
For example, some documents may need to be witnessed or executed as deeds. Others may require particular people to sign them or specific formalities to be followed during the signing process.
You should therefore never assume something is “just paperwork” because another person tells you that it is standard. Your signature can provide important evidence that you agreed to the terms.
Do I Have a Right to Take Legal Advice Before Signing?
If someone gives you an important legal document and asks you to sign it, it is reasonable to ask for time to read and understand it.
Depending on the type of transaction, independent legal advice may be particularly important. In some circumstances, another party, lender or solicitor may specifically require evidence that independent advice has been obtained.
Be cautious if you are being pressured to sign immediately without having an opportunity to properly consider what you are agreeing to. Once you have signed, resolving a problem can be considerably more difficult than raising concerns before the document becomes binding.
What Should You Check Before Signing?
Start by reading the entire document rather than focusing only on the sections you believe are important.
Consider:
- What are you agreeing to do?
- How long does the agreement last?
- How much could you have to pay?
- Can the amount payable change?
- Can you terminate the agreement?
- What happens if you want to leave early?
- What happens if the other party breaches the agreement?
- Are you accepting responsibility for somebody else’s obligations?
- Are you giving up any existing rights?
- Is anything you expected to be included missing?
- How will disputes be resolved?
If you cannot confidently answer these questions, obtaining legal advice before completing the signing process may be sensible.
Is an Electronic Signature Legally Valid?
The fact that a document is signed electronically does not automatically prevent it from being legally effective. An electronic signature can be capable of satisfying a legal requirement for a signature in many circumstances. However, the precise formalities depend on the type of document involved.
The method of execution, witnessing requirements and identity of the person signing can all matter. This is particularly important for documents that must be executed as deeds or where somebody is signing on behalf of another individual, company or organisation.
The convenience of electronic signing should not distract from the importance of understanding the document itself. Clicking a button or typing your name can still have significant consequences.
Can Someone Sign a Legal Document on Your Behalf?
Sometimes, but they need appropriate authority to do so. There are various circumstances in which one person may be signing on behalf of somebody else. In a business context, for example, an authorised individual may sign certain documents for a company.
Another example involves Powers of Attorney. A valid Power of Attorney can provide an attorney with authority to deal with certain matters on behalf of another person, subject to the type of Power of Attorney, its terms and applicable legal requirements.
Someone should not simply assume they can sign another person’s name because they are a spouse, child, relative or business colleague. If there is uncertainty about who has authority to execute an important document, this should be established before it is signed.
Commercial Leases Can Create Long-Term Obligations
Taking on business premises is a good example of why reading a document is not necessarily the same as understanding its legal effect.
A commercial lease may contain obligations concerning rent, service charges, insurance, repairs, alterations, permitted use, assignment and what happens when the lease ends. A tenant could potentially take on substantial repairing responsibilities or agree to a rent review mechanism that affects the cost of occupying the premises for years.
The lease may also contain or be accompanied by a personal guarantee, particularly where the tenant is a limited company. Obtaining advice before signing gives you an opportunity to identify these obligations and, where appropriate, negotiate terms before becoming bound by them.
What About Personal Guarantees?
Personal guarantees deserve particular attention. A company director may be asked to guarantee their company’s obligations under a lease, loan or other commercial agreement.
Operating through a limited company would ordinarily provide separation between company liabilities and the individual’s personal finances. Giving a personal guarantee can potentially expose the guarantor personally if the company fails to meet the guaranteed obligations. The precise extent of that liability depends on the wording of the guarantee.
This is therefore not a document that should be signed simply because someone describes it as a formality. The legal and financial implications could be substantial.
Property Documents Can Affect Your Rights for Years
Legal documents relating to land and property can have consequences long after they are signed. For example, you might be asked to enter into an agreement concerning a boundary, right of way, restrictive covenant or jointly owned property.
What appears to be a relatively minor agreement with a neighbour could potentially affect how your property can be used or even become relevant when you later try to sell it.
Property rights can also affect future owners. This makes it particularly important to understand whether an agreement is intended to create permanent or long-term rights over land before signing.
What If You Are Lending Money to Someone?
Informal loans between friends, relatives or business contacts frequently begin with trust rather than legal documentation. If somebody later prepares a loan agreement, both parties should understand what it says before signing.
Important provisions might include the amount borrowed, repayment dates, interest, what happens if payments are missed and whether any security is being provided. The same principle applies if a family member provides money towards the purchase of a property. It should be clear whether the money is intended to be a gift, a loan or an investment giving the person an interest in the property.
Properly documenting the arrangement can help prevent disagreements years later.
Can You Get Out of a Contract After Signing It?
Sometimes, but you should not assume that simply changing your mind will allow you to cancel an agreement. Cancellation rights vary considerably depending on the type of agreement, how it was entered into and whether specific consumer protections apply.
For many legal and commercial agreements, there is no general cooling-off period simply because you later regret signing.
There may be circumstances in which the validity or enforceability of signed documents can be challenged. However, this is very different from having an automatic right to cancel. The safest approach is therefore to resolve uncertainties before signing.
What If You Have Already Signed Something You Don’t Understand?
Do not ignore it. If you have signed a document and subsequently discover a term you did not expect, obtaining advice promptly can help you understand your position before taking further action.
A solicitor can review the document and explain whether it is likely to be legally valid, what obligations it creates and what options may be available.
If a dispute has already developed, early advice may also help establish whether the matter can be resolved through negotiation or another form of dispute resolution rather than court proceedings.
Is Independent Legal Advice Always Necessary?
No. Requiring a solicitor to review every document you encounter would be unnecessary. The question is usually one of risk.
You should consider the value involved, the length of the commitment and what you stand to lose if you have misunderstood the agreement. Legal advice becomes particularly worthwhile where you are being asked to:
- Take on significant financial obligations.
- Sign a long-term commercial agreement.
- Give a personal guarantee.
- Agree rights concerning property or land.
- Waive or give up existing legal rights.
- Accept responsibility for somebody else’s obligations.
- Sign a document containing terms you do not understand.
Paying for advice before signing may be considerably less expensive than resolving a dispute afterwards.
Don’t Be Afraid to Ask Questions
Legal documents can contain technical terminology, cross-references and clauses whose consequences are not immediately obvious.
You should not feel that you have to sign simply because the other party tells you that everyone else accepts the same terms.
You should ask what particular clauses mean. Question provisions that do not reflect what you thought had been agreed. Check whether there are particular witnessing or execution requirements and make sure the correct signing process is followed.
Most importantly, if the consequences could be significant, consider having the document professionally reviewed before signing.
How AFG Law Can Help
At AFG Law, our solicitors advise individuals, property owners and businesses on a wide range of legal documents and agreements.
Our teams can help you understand what you are being asked to sign, identify potential risks and explain the legal consequences before you make a commitment. This can include property documents, commercial agreements, personal guarantees, Powers of Attorney and other important arrangements.
Where appropriate, we can also negotiate proposed terms on your behalf.
If you have already signed a document and a disagreement has arisen, our Dispute Resolution team can advise you on your legal position and the options available.
Taking legal advice does not necessarily mean making a straightforward transaction more complicated. Sometimes it is simply about making sure you understand what you are agreeing to, that the document is executed correctly and that you are comfortable with the consequences before you sign your name.