In the law, a seal affixed to a contract or other legal instrument has had special legal significance at various times in the jurisdictions that recognise it. In the courts of common law jurisdictions, a contract which was sealed ("made under seal") was treated differently from other written contracts (which were "made under hand"), although this practice gradually fell out of favour in most of these jurisdictions in the 19th and early 20th century. The legal term seal arises from the wax seal used throughout history for authentication (among other purposes).
Originally, only a wax seal was accepted as a seal by the courts, but by the 19th century many jurisdictions had relaxed the definition to include an impression in the paper on which the instrument was printed, an embossed paper wafer affixed to an instrument, a scroll made with a pen, or the printed words "Seal" or "L.S." (standing for the Latin term locus sigilli meaning "place of the seal").
Notwithstanding their reduced significance, seals are still used on contracts, usually in the impression on paper form.
Legal significance in contract law
Until modern statutory reforms in contract law, a seal was widely recognised by courts in common law jurisdictions as removing the need for consideration (value) in a contract. This reflects classical contract theory, in which consideration was viewed as a formal aspect of a contract, so that a seal could be considered an alternative form. A seal was not per se a type of consideration, but rather raised a presumption of consideration (courts have varied in their opinions of whether this presumption was rebuttable). See, e.g., Marine Contractors Co. Inc. v. Hurley, 365 Mass. 280, 285-86 (1974).
The rationale for this special treatment of sealed contracts can be understood in terms of the legal formalities that are associated with sealing a document with a wax seal. Firstly, the following of the legal formality of affixing a seal to a document was evidence of the existence of a contract. Secondly, the need to use a seal – widely known to have legal significance – served to impress upon the parties the significance of the agreement being made. This element of deliberation is important in the context of many legal theories for why donative promises are not generally enforceable in the same way as contracts: there is a concern that donative promises are sometimes made under pressure (for example, from family members) without adequate deliberation, which explains why a requirement for the legal formality of the seal might substitute for consideration to give enforceability to donative promises. Thirdly, the following of the legal formalities through the use of a seal demonstrated beyond doubt that a legal transaction was intended by the parties.[1]
In addition to these three abstract reasons, there may also have been a more practical reason, namely that the object used to imprint the wax, usually an engraved signet ring, identified its owner, thereby providing evidence that the owner of the seal was party to the contract.
Besides substituting for consideration, other consequences of the seal that, at least historically, have held include:[2]
even payment did not discharge a sealed contract, if the instrument itself was not physically destroyed.[3]
fraud was not permitted as a defence to a sealed contract
subsequent modifications to a sealed contract were not binding except where the modifications were also under seal.
a principal not designated as such in the contract (undisclosed principal) could not be connected to the contract if it was sealed.[4]
an instrument under seal may also enjoy a longer statute of limitations within which it may be enforced.[5]
Position in different jurisdictions
England and Wales
In England and Wales, the common law courts originally recognised only wax seals, but this requirement was gradually relaxed. By the 20th century a small circle of red adhesive paper affixed to the document in question was sufficient when an individual had to use a seal[6] (most commonly on a contract for the sale of land), although the courts also held that a circle containing the letters "L.S." was adequate.[7]
The common law rule which required that a deed made by a private individual had to be sealed to be validly executed was finally abolished in 1989 by the Law of Property (Miscellaneous Provisions) Act 1989. The Act implemented recommendations made by the Law Commission of England and Wales in their 1987 report Deeds and Escrows[8] and replaced seals with the requirements that the document had to explicitly state that it was being executed as a deed, and had to be witnessed.[9]
With regard to companies and other corporate bodies, the common law originally required that all contracts made by such a body had to be made under seal, whether they were deeds or not. This rule was gradually eroded away, for example being abolished in respect of companies by the Companies Acts in the first half of the twentieth century,[10] but until 1960 remained in force for other corporations.[11] It was abolished by the Corporate Bodies' Contracts Act 1960.[12] Normal contracts (i.e. not deeds) can now be made by a corporation in the same way as they can be made by an individual.
The Companies Act 1989 removed the requirement for a company to have a common seal at all, and made provision for those documents which had previously needed to be executed under seal, such as deeds, to instead be executed by officers of the company.[13] However companies can still have and continue to use seals to execute deeds if they wish, in which case the seal has to be engraved (i.e., a seal which leaves an impression on the page, not printed or a wafer facsimile) and to bear the name of the company.[14]
Some other corporations (which are not companies registered under the Companies Acts) are still required to have and use seals. For example, the royal charter incorporating the Royal College of Nursing requires the college to have a common seal,[15] as does that of the BBC.[16]
Also, the changes relating to deeds which were introduced in 1989 do not apply to corporations sole such as government ministers or bishops of the Church of England. Therefore, where a corporation sole has to execute a deed, it continues to have to do so by the use of an official seal.[17]
Impressions directly on the paper were recognized early and are still common for notarial and corporate seals, and gummed paper wafers have been widely used. In the absence of statute, decisions have divided on the effectiveness of the written or printed word 'seal', the printed initials 'L.S.' ..., a scrawl made with a pen (often called a 'scroll') and a recital of sealing.[18]
The relaxation of the definition of a seal was generally contemporaneous with reduced distinctions given to sealed contracts. This trend can be seen as a parallel of the courts' modern relaxation of their interpretation of the Statute of Frauds, and reflects the evolution of modern contract theory from classical contract theory. It has been noted that "about two-thirds of the [US] states have now adopted statutory provisions depriving the seal of its binding effect,"[19] although several important jurisdictions, such as New Jersey and Wisconsin, have retained the concept.[20]
Schnell v. Nell (1861), which is widely cited as an example of nominal consideration, involved a sealed contract. Although the distinction of seal had already been abolished by Indiana statute, it is likely the parties viewed the seal as making the contract enforceable, much as the nominal consideration of $1 would have under classical contract theory.[21]
↑ Basic Contract Law, Fuller and Eisenberg (2001), Seventh Edition, Appendix C
↑ This rule no longer exists in any common law jurisdiction.
↑ This was one of the last surviving rules giving special significance to sealed contracts in some jurisdictions that had abolished or greatly reduced the significance of seals. The 1925 opinion in Crowley v. Lewis, 239 N.Y. 264, 146 N.E. 374 explains one reason the courts were not eager to dispense with this rule, as "many times the seal must have been used for the express purpose of relieving the undisclosed principal from personal liability".
↑ See, e.g., 42 Pa.C.S. § 5529(b), allowing a twenty year period within which to bring an action to enforce an instrument under seal instead of the four years that would otherwise apply under Pennsylvania law.
↑ Section 36A of the Companies Act 1985 as inserted by the Companies Act 1989 – see Companies Act 1989Archived 2010-02-08 at the Wayback Machine , Office of Public Sector Information. This provision has now been replaced by sections 44 and 45 of the Companies Act 2006 (ibid)
↑ See NJSA 2A:14-1, 2A:14-4, 2A:25-1, and most importantly, 2A:82-3. See also Wis. Stats. 891.27, Bradley Bank v. Tomahawk Pulp & Paper Co., 242 N.W. 505 (Wis. 1932)
A deed poll is a legal document binding on a single person or several persons acting jointly to express an intention or create an obligation. It is a deed, and not a contract because it binds only one party.
A notary public of the common law is a public officer constituted by law to serve the public in non-contentious matters usually concerned with general financial transactions, estates, deeds, powers-of-attorney, and foreign and international business. A notary's main functions are to validate the signature of a person ; administer oaths and affirmations; take affidavits and statutory declarations, including from witnesses; authenticate the execution of certain classes of documents; take acknowledgments ; provide notice of foreign drafts; provide exemplifications and notarial copies; and, to perform certain other official acts depending on the jurisdiction. Such transactions are known as notarial acts, or more commonly, notarizations. The term notary public only refers to common-law notaries and should not be confused with civil-law notaries.
A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settlor", the party to whom the right is entrusted is known as the "trustee", the party for whose benefit the property is entrusted is known as the "beneficiary", and the entrusted property itself is known as the "corpus" or "trust property". A testamentary trust is created by a will and arises after the death of the settlor. An inter vivos trust is created during the settlor's lifetime by a trust instrument. A trust may be revocable or irrevocable; an irrevocable trust can be "broken" (revoked) only by a judicial proceeding.
A seal is a device for making an impression in wax, clay, paper, or some other medium, including an embossment on paper, and is also the impression thus made. The original purpose was to authenticate a document, or to prevent interference with a package or envelope by applying a seal which had to be broken to open the container.
A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor. The one authorized to act is the agent, attorney, or in some common law jurisdictions, the attorney-in-fact.
Civil-law notaries, or Latin notaries, are lawyers of noncontentious private civil law who draft, take, and record legal instruments for private parties, provide legal advice and give attendance in person, and are vested as public officers with the authentication power of the State. As opposed to most notaries public, their common-law counterparts, civil-law notaries are highly trained, licensed practitioners providing a full range of regulated legal services, and whereas they hold a public office, they nonetheless operate usually—but not always—in private practice and are paid on a fee-for-service basis. They often receive generally the same education as attorneys at civil law with further specialized education but without qualifications in advocacy, procedural law, or the law of evidence, somewhat comparable to solicitor training in certain common-law countries.
Legal instrument is a legal term of art that is used for any formally executed written document that can be formally attributed to its author, records and formally expresses a legally enforceable act, process, or contractual duty, obligation, or right, and therefore evidences that act, process, or agreement. Examples include a certificate, deed, bond, contract, will, legislative act, notarial act, court writ or process, or any law passed by a competent legislative body in municipal (domestic) or international law. Many legal instruments were written under seal by affixing a wax or paper seal to the document in evidence of its legal execution and authenticity. However, today many jurisdictions have done away with the requirement of documents being under seal in order to give them legal effect.
A mortgage is a legal instrument of the common law which is used to create a security interest in real property held by a lender as a security for a debt, usually a mortgage loan. Hypothec is the corresponding term in civil law jurisdictions, albeit with a wider sense, as it also covers non-possessory lien.
In common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property. The deed has a greater presumption of validity and is less rebuttable than an instrument signed by the party to the deed. A deed can be unilateral or bilateral. Deeds include conveyances, commissions, licenses, patents, diplomas, and conditionally powers of attorney if executed as deeds. The deed is the modern descendant of the medieval charter, and delivery is thought to symbolically replace the ancient ceremony of livery of seisin.
An indenture is a legal contract that reflects or covers a debt or purchase obligation. It specifically refers to two types of practices: in historical usage, an indentured servant status, and in modern usage, it is an instrument used for commercial debt or real estate transaction.
Wills have a lengthy history.
In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property which enables the creditor to have recourse to the property if the debtor defaults in making payment or otherwise performing the secured obligations. One of the most common examples of a security interest is a mortgage: a person borrows money from the bank to buy a house, and they grant a mortgage over the house so that if they default in repaying the loan, the bank can sell the house and apply the proceeds to the outstanding loan.
A trust instrument is an instrument in writing executed by a settlor used to constitute a trust. Trust instruments are generally only used in relation to an inter vivos trust; testamentary trusts are usually created under a will.
A company seal is an official seal used by a company. Company seals were predominantly used by companies in common law jurisdictions, although in modern times, most countries have done away with the use of seals.
Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts. The concept has been adopted by other common law jurisdictions.
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. A binding agreement between actors in international law is known as a treaty.
An act is an instrument that records a fact or something that has been said, done, or agreed. Acts generally take the form of legal instruments of writing that have probative value and executory force. They are usually accepted as self-authenticating demonstrative evidence in court proceedings, though with the precarious status of notaries public and their acts under common law, this is not always so.
Formalities in English law are required in some kinds of transaction by English contract law and trusts law. In a limited number of cases, agreements and trusts will be unenforceable unless they meet a certain form prescribed by statute. The main kinds of formality that a statute can require are to put the transaction in writing, to make a deed, or to register it at a government registrar.
In the United States, a notary public is a person appointed by a state government, e.g., the governor, lieutenant governor, secretary of state, or in some cases the state legislature, and whose primary role is to serve the public as an impartial witness when important documents are signed. Since the notary is a state officer, a notary's duties may vary widely from state to state and in most cases, a notary is barred from acting outside his or her home state unless they have a commission there as well.
A notarial act is any written narration of facts (recitals) drawn up by a notary, notary public or civil-law notary authenticated by the notary's signature and official seal and detailing a procedure which has been transacted by or before the notary in their official capacity. A notarial act is the only lawful means of proving those facts of which it is the recognized record, whereas on other matters it is usually inadmissible, because, being beyond the powers entrusted to the notary by law, it is non-official. In most common-law countries, multiple-page acts are bound together using a sewn or knotted ribbon, the ends of which are secured by a wafer impressed with the notary's seal. This is called annexing or annexure.
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