Sealed Instrument

A sealed instrument is necessary in many legal activities, for example, when concluding contracts or accepting certain obligations. Securing a loan agreement also often involves the use of a sealed instrument. This is a legal document on which a personal seal is affixed, or the word SEAL is used. It certifies that the obligated party is fully aware of its obligations, and a sealed document is undeniable proof of the contractual relationship.

What Is the Significance of a Sealed Instrument?

In earlier times, the problem of fraud was as severe as it is now. Documents certifying contracts between the parties could be forged. An effective way to combat this issue was the participation of a third party that certified the relationship between the parties that signed the contract. However, this procedure was too expensive and required time. Therefore, people started using wax seals as an irrefutable confirmation of the obligations recorded in contracts. Initially, the courts required that the seals be made of wax and did not accept documents with other seals as irrefutable evidence. However, this restriction was subsequently lifted.

Modern Requirements for a Sealed Instrument

Modern courts have much more lenient requirements for the seal itself. For example, it could be paper with the word “SEAL” embossed or simply written on the signature line. Moreover, some states have already repealed these laws and no longer differentiate between sealed documents and unsealed ones. But still, be prepared for the fact that the lender may ask you to sign a sealed document.

What Does a Sealed Document Mean for a Borrower?

If you signed a sealed document when drawing up the loan agreement, it will be irrefutable evidence of the underlying obligations. If the debtor repays the debt on time, the creditor will not have to use this document. But if the debtor refuses to pay, the sealed instrument will become a powerful argument in court against the debtor. The borrower will not be able to refuse the obligations assumed under the pretext that they did not fully understand them or were unfamiliar with the conditions of repaying a debt. The reason is that the document signed by a borrower has a certifying seal.

Using a Sealed Document

State law has a statute of limitations for contracts. This means that after a certain period, for example, 4 years, the agreements cease to have legal force. In most states, this period for outstanding loans ranges from 3 to 6 years, but in others, it reaches 10 years. Therefore, if the debtor fails to fulfill their obligations, the creditor can file a suit during this period. In this case, the sealed document will become the basis for consideration in court.

A sealed document is necessary not only to combat fraudsters but also to increase the borrowers’ responsibility. When a person signs this document, they follow all the agreement terms more carefully and try to repay the debt on time.