The Contract Isn’t Signed! What Now?

If you are involved in a dispute concerning a written, but unsigned, commercial or business contract, do not assume that the lack of signatures makes the agreement unenforceable. In many instances, courts and arbitrators will look to other factors (including the conduct of the parties) to determine whether the contract is valid and enforceable despite the fact that one or more of the parties never signed it.

One legal doctrine that is closely related to this issue is the so-called “Statute of Frauds”. This doctrine, which dates back to 17th Century England, varies from state to state. Generally, it stands for the proposition that certain types of agreements or transactions (which have traditionally been deemed particularly likely targets for fraud) must be in writing and the writing must be signed by the party against whom it is sought to be enforced. 

In Virginia, these types of agreements include (without limitation) contracts for the sale of real estate, the sale of goods priced $500 or more, a personal guaranty for a debt, and a loan agreement in an aggregate amount of $25,000 or more. See Code of Virginia §§ 8.2-201, 11-2. These statutes are narrow and leave a lot of room for other agreements that do not have to be in a signed writing, including many types of service contracts and construction contracts.

So, assuming the situation presents an unsigned agreement that is not subject to the Statute of Frauds, how does a judge (or arbitrator) determine whether the parties formed an enforceable contract? 

The court will examine evidence to determine whether the parties, by their words or acts, objectively manifested or expressed their mutual assent to the agreement. This is often referred to by courts as a “meeting of the minds.” In practical terms, the court will try to determine, based on what the parties have said (or done), whether the parties to the subject agreement have shown that they intended to form a contract. 

If the court answers that question in the affirmative, then there is a contract, and that contract can be enforced. Questions of contract interpretation may remain, but the question of whether any contract exists is decided.

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If you have any questions about this post or other contractual issues, please contact Jon Hollis or another member of our Litigation Team.