• By Ashe Lockhart
• February 17, 2009
>> Have you ever wondered why some contracts have “(SEAL)” printed at the end of a signature line? The use of (SEAL) as required for contracts in North Carolina has been abolished – as it has been in most other states. However, there are two reasons why (SEAL) is still a common device on a contract: (1) a contract “under seal” extends the statute of limitations for breach of contract from 3 to 10 years and (2) in North Carolina, a contract under seal is a substitute for consideration (which is what you offer in exchange for the other party’s performance of their obligation under the contract). Case law from the NC Supreme Court holds that if a contract is under seal, then a court may not inquire behind the seal as to whether there is consideration. The NC Court of Appeals has ruled, in contrast to our highest court, that a contract under seal creates only a rebuttable presumption of the existence of consideration. The use of (SEAL) is probably most commonly found in consumer boiler plate contracts – like cell phone contracts, auto loan documents and credit card agreements. But business documents do occasionally include the (SEAL) device on the signature line.
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