California Civil Code Section 1550 provides that only four elements are "essential" to the existence of a contract:
- Parties capable of contracting;
- Their consent;
- A lawful object; and
- A sufficient cause or consideration.
Noticeably absent from this list are a writing, signing or delivery. Writing and signature requirements are imposed by statutes of fraud (e.g., Cal. Comm. Code § 2201) and address the question of the enforceability, not formation, of a contract. But what about delivery? Some statutes do impose a requirement of delivery. For example, an issuer's duty to register the transfer of a certificated security arises when, among other things, the certificate is presented to the issuer. Cal. Comm. Code § 8401. The general rule, however, as expressed in Section 1550 is that delivery is not necessary to form a contract.
While delivery may not be essential to contract formation, it may evidence consent. This point was made by Professor Corbin, who also points out that a party to a contract may be bound without delivery:
The phrase "executed and delivered" has become so universal that I expect that many lawyers simply assume that delivery is always required for contract formation or request "due execution and delivery" opinions out of habit.
"For the validity of an informal contract, a writing is necessary only when at least one of the parties has sufficiently expressed an intention not to be bound without one. In such a case, the agreement must be put in writing, and that writing must be presented to this party for an expression of assent. No doubt, this party normally means that the writing shall be signed by both parties, and may mean also that it shall be delivered in some fashion. Whatever requirements of this sort that may have been made in advance, the parties can always enter into a contract by a clear expression of intent to do so without them. Neither party can unilaterally dispense with such requirements laid down by the other party, any more than one can eliminate any of the provisions of the other party’s proposal. If the reduction of the agreement to writing is thus made necessary, an assent to the writing as a sufficient one must also be manifested. This manifestation commonly consists of signing and delivery. This accounts for the fact that it has been held in many cases that the writing must be delivered. It may be true that merely reading over the terms of a writing is not a manifestation of assent to them. Even affixing one’s signature and continuing to hold possession of the paper may not express assent. Delivery to another person is indeed a common and an expressive act. But assent can be expressed effectively in many ways. Delivery is only one of them. One party may sign and hand the instrument to the other, it being already understood that the other shall retain possession of it. If the other then signs and pockets it, a contract has been made, effective as to both, although the first party made delivery before being bound and the second was bound without making delivery. If, on the other hand, there has not been expression of assent in another manner, then there is no written contract without manual delivery.
Just as in the case of contracts under seal, delivery of an informal writing may be in escrow and subject to some condition not expressed in the writing itself. Such a conditional delivery as this consummates a contract only in case the other party expresses assent thereto, either in a proposal requesting such a delivery or in accepting the proposal that is made by making such a delivery. If one party prepares a written instrument, signs it, and sends it to another for execution, the latter cannot consummate a contract by signing the paper and then delivering it, either to the offeror or to a third party, with the accompanying statement that it is conditional on an event that is not already specified in the writing. Such a delivery would be a mere counter-offer."
1 Corbin on Contracts § 2.11 (2020) (footnotes omitted).