When a company is considering entering into a particular business venture considerable time is taken in discussing, negotiating and reviewing the contractual terms in the proposed agreement between the parties.

Whilst focusing on key contractual terms of the proposed agreement, often the signing provisions to the agreement to bind the company are overlooked.

Failure by a company to sign an agreement correctly could lead to a challenge as to whether the company is legally bound by the terms of the agreement.

What form of contract is the company entering into – contract in writing or deed?

The first question that should be considered when a company is signing a contract is – what form of contract is the company entering into?

In Manx law, certain contracts can be made verbally, but often for the sake of certainty, most business contracts are made in written form. Certain types of contract are, however, not enforceable unless they are in writing, for example guarantees, assignments of contractual rights and other intangible assets (such as book debts or goodwill), transfers of shares.

Further categories of agreement are not only required to be in writing but must also be in the form of deeds, for example when dealing with the transfer of land.

Whether the company is entering into a contract in writing or by deed will affect the signatory requirements for the company to bind itself to the contract.

Signing of contract in writing and by deed

The table below sets out the general signing requirements in relation to the execution of contracts and deeds by companies incorporated under the Companies Acts 1931 to 2004 and the Companies Act 2006. There are certain exceptions to this rule for example where a contract contains power of attorney provisions.

Execution of a written ContractExecution of a written Deed
Companies incorporated under the Isle of Man Companies Acts 1931 to 2004A contract may be executed in one of the following manners:-
(1) If the Company has elected to have a seal, by a company affixing its common seal; or
(2) By any person acting under the company’s authority.
A deed may be executed in one of the following manners:-
(1) If the Company has elected to have a seal, by a company affixing its common seal; or
(2) Executed by two directors; or
(3) Executed by a director and secretary.
Companies incorporated under the Isle of Man Companies Act 2006A contact may be executed in one of the following manners:-
(1) If the Company has elected to have a seal, by the company affixing its common seal; or
(2) By any person acting under the company’s authority.
A deed may be executed in one of the following manners:-
(1) If the Company has elected to have a seal, by the company affixing its common seal
(2) By any person acting under the company’s authority, where the instrument makes it clear on its face that it is intended by the person or persons making it to be a deed.

Should you wish any further guidance on the form a contract shown take or the execution of a document by a company, then please contact one of our commercial team detailed below.

This fact sheet provides brief guidance on the execution of contracts by a company (being a company incorporated under the Isle of Man Companies Acts 1931 to 2004 or Isle of Man Companies Act 2006). It should not be taken to be providing legal advice or providing a comprehensive guide to these points. This fact sheet does not comment on protected cell companies. No person should act in reliance on any statement contained in this guide without first obtaining specific legal advice.