Contracts are the backbone of many business transactions and even personal lives. They serve as binding agreements that outline the rights and responsibilities of anyone involved in the contract.
A contract has many elements that play a role in making it valid. One crucial element of any contract is a signature. A signature signifies consent and agreement from the parties that have decided to draw up a contract. However, what happens when a person forges a signature?
Furthermore, does a forged signature void a contract?
In this article, I will take you through the legal implications resulting from forging a signature in a contract, including how the act can impact the validity of a contract.
Let’s dive in.
What Are the Laws of a Contract?
In any legal system, a contract requires a clear offer from one party, an acceptance of the offer by another party, a consideration (which involves exchanging of something of value between the parties), and finally, a mutual intent to create a binding agreement.
All these laws work together to build a contract.
Why is a Signature Important?
When two or more parties decide to draw up a contract, a signature shows that the parties involved have read the terms and conditions and agreed to them. It further serves as a form of authentication.
Therefore, after signing the contract, both parties affirm that they are willingly entering into a binding agreement.
Can a Forged Signature Void a Contract?
When someone replicates another person’s name or signature with fraudulent intent, it is an act of forgery. This act is a crime in many jurisdictions and can carry a penalty such as a fine or even jail time. The legal consequences of forgery can be devastating for anyone caught guilty.
In the context of a contract, forgery is when one party(forger) signs on behalf of the other(victim) without the consent or knowledge of that person. When a signature on a contract is falsified, it is void or voidable, depending on various factors.
Here are some terms used when entering into a contract:
Void vs Voidable
Whether a contract becomes void or voidable due to a forged signature depends on the specific circumstances.
A void contract is not valid from the start. The contract lacks one or more of the essential elements required for a contract to exist. In cases of forgery, if the victim can prove that they did not provide genuine consent, then the contract is void.
On the other hand, a voidable contract is initially valid, but a victim can void it. If the victim chooses to void the contract, then the contract is voidable.
Related: What happens when husband forged wife’s signature on 401(k)
What Makes a Contract Void or Voidable?
The validity of a contract with a forged signature depends on various factors, including jurisdictional laws and the circumstances surrounding the forgery. Often, a forged signature renders a contract void or voidable, depending on these factors.
Genuine Consent from the victim
Genuine consent is an essential part of any contract. If one party’s signature is forged, the party’s consent is absent, and the contract may be voidable.
Materiality of the forgery of the contract
The impact of the forged signature on the contract’s overall terms plays an important role. If the forgery is for monetary gain, it is void.
Innocent Party speed to void the contract
The victim often has the option to void the contract. However, the innocent party must act quickly upon discovering the forgery. The statute of limitation requires the victim to file a complaint on a forgery case during a limited time. If the time elapses, the victim will not have the ability to void the contract.
Benefit to the victim
When a victim has enjoyed the benefits of the contract before they note the forgery, it is hard for them to void it.
Legal Remedies a Victim Could Use If Their Signature is Forged
When a victim realizes their signature is forged on a contract, they can take legal measures against the party that forged their signature. However, legal remedies depend on the jurisdiction the victim is in.
Here are the legal remedies a victim could use.
Rescission
Rescission is the legal process of canceling or voiding a contract. The victim can rescind the contract after discovering forgery, rendering a contract void.
Legal Action
The victim can pursue legal action against the forger, seeking compensation for damages for the harm caused by the forgery, including any financial losses or reputational damage.
Criminal Charges
In addition to legal action, the victim can charge a forger with criminal charges, leading them to get penalized if their actions are discovered and proven in a court of law.
Challenges in Resolving Forged Signature Cases
Although a victim has a legal leeway to charge a forger, there are some hindrances to their legal petitions in court that could deny them the ability to void a contract
These hurdles can be:
Burden of Proof
The victim often bears the burden of proving that the signature is forged. That may need expert analysis and testimonies, which a victim might be unable to provide.
Statute of Limitations
Another hurdle is time limitations on pursuing legal remedies for forged signatures. Victims must act within a specific time frame. If the timeframe elapses a victim loses the ability to void a contract.
Good Faith
In some cases, there could be a third party who is not involved in the forgery relying on the contract in good faith, and without knowledge of the forgery, they may have legal rights to keep the contract standing. In such a case, a victim cannot void the contract.
Final Thoughts
A forged signature can cause a contract to be void. However, the voidability of a contract depends on all the above factors. A forged signature in a contract can have legal implications, rendering the contract voidable.
However, resolving cases involving forged signatures can be tricky, requiring thorough evidence and legal procedures. Therefore, individuals and businesses should be cautious to avoid the risk of forgery. Verifying the identity of the signing parties, maintaining secure records, and seeking legal advice when doubts arise are sure ways of preventing cases of forgery.