The main change from the traditional approach is that, as long as the deed has been signed either by an individual or by a company (according to Section 127 (3) of the Corporations Act) and by a person who is not involved in the act, no seal is required (see Section 38(3) of the Conveyancing Act 1919 (NSW)). Contracts under the fence must be written or printed on paper. These are conclusive documents between the parties once they have been signed, sealed and delivered. For more information, check out our blog: What is the difference between an act and an agreement? The relaxation of the definition of a label was generally at the same time as reduced distinctions for sealed contracts. This trend can be seen as a parallel with the modern easing of the interpretation of the status of fraud by the courts and reflects the evolution of modern contract theory from classical contract theory. It was found that “approximately two-thirds of the [U.S.] states have now passed legislation that deprives the label of its commitment effect[19] although several important jurisdictions, such as New Jersey and Wisconsin, have maintained the concept. [20] Delivery is made either by the actual surrender to the other party or by the intention that the deed will be effective even if it is kept in the possession of the party performing it. It is the only formal contract because it infers its validity from the form in which it is expressed and not because of the agreement or consideration. Compared to a real wax seal, however, the mere entry of the term “seal” can have potential problems. In fact, many people without knowledge of the contract would not even understand what the term means. That is why many states have abolished the difference between sealed and unsealed treaties. In addition, Section 2-203 of the Single Code of Trade removed any distinction for the sale of goods. Therefore, most contracts cannot simply have a seal to create the validity of the treaty itself.

Unlike a sealed contract, an ordinary contract requires consideration, which is a promise. Such a reflection could simply be a promise to do something in exchange for something else. For example, this could be a promise to sell your car to someone else for payment. However, a sealed contract completely removes this element and replaces it with a seal. In addition, a state that authorizes sealed contracts may have a different limitation period than ordinary contracts that have a counterparty for such contracts. For example, Washington D.C. has a 12-year limitation period for sealed contracts compared to a 3-year limit for regular contracts. However, the party who excludes itself from the waterproofing could be confronted with the defendant`s argument that it is not sealed, either because there is sufficient consideration or because the defendant did not know that the contract was sealed. Some courts even find that a specific provision of the contract that both parties believe that the sealed document is sufficient is sufficient evidence for the label, even if there is no seal. Sealed contracts seem to be akin to an ordinary contract, but they are quite different.

A sealed contract contains a commitment (s) that is bound by one party to another. Its validity is not determined by the consideration exchanged, as consideration is not a prerequisite. On the contrary, the validity of this type of contract derives from the form itself. However, as noted above, the form itself will only be valid after it has been signed, sealed and delivered. “Any act, whether property or not, must be signed and sealed and attested by at least one witness who is not involved in the facts, but there is no need for a particular form of words necessary for certification.”