Can implied contract be legal while recorded in a board meeting?

Corporate documentation is an array of various kinds of documents, which appear as a result of company activities. Minutes of board meetings constitute a considerable part of this body of documentation. In today’s business world there are numerous discussions on their legal status. Some experts believe that minutes of board of directors meetings recorded directly during the meetings have the necessary legal effect and may be used on a par with other types of contracts. Another group of experts believes on the contrary – when a meeting is held and its minutes are drawn up, they only record its progress, so such minutes cannot be considered legal documents in the traditional sense. You can find out which of these experts is right in this article.

The Role of Documentation in Digital Document Management

The use of different types of board software has had an impact not only on the organization of the company, but also on the quantity and quality of documentation used in the daily activities of the company. The most controversial, in our opinion, in this array of documents are minutes of board meetings.

In their essence, they are a document that records in a summarized and organized form the course of the meeting of the board of directors and decisions made on issues outlined in the agenda. On the one hand, minutes may be regarded as a non-traditional type of corporate documentation, as indicated by some of its features:

  • The presence of several parties in its preparation (we mean the participants of the meeting);
  • The written form with mandatory confirmation of its contents by the signatures of participants;
  • Clear compliance with the form – table of contents, the essence of the issues, decisions taken, signatures of participants, etc.

Modern practice of document management, including court practice, knows many cases when minutes of board of directors meetings were later recognized as an agreement between the parties, although executed in an unusual form. But there is a slight nuance here: if the minutes fix a decision on a disputable issue, it can be regarded as an agreement. If the protocol records only the intentions to make a decision on a disputed issue, then it cannot be considered a contract or an agreement in the usual sense, it is only a declaration of intent.

Does an implied contract have the necessary legal force?

In the era of widespread use of digital technology, including during online meetings, the question of the legal validity of records of such meetings is gaining particular relevance. According to many civil and contract law experts, modern implicit contracts concluded during online meetings and recorded in minutes must be recognized as legally enforceable documents. 

This is indicated by the distinctive features of such a contract:

  • A declaration of the intentions of the parties;
  • It is the result of the realization of meaningful actions of individuals and legal entities;
  • It does not require additional confirmation.

In this case, it does not matter what is the form of the conclusion of the implied contract. The practice of companies’ development shows that changes concern not only the organizational issues of the company, but also the ways of document management. More and more representatives of business move to a digital method of documentation, which in no way reduces the legal force or value of this or that type of documentation.