Managing Partner
Although the enforceability of a written contract signed by all parties to the agreement rarely becomes an issue, legal disputes can arise when one side tries to enforce a contract the other never signed.
Understanding Contract Formation
Forming a contract involves two significant steps: offer and acceptance. Parties create a contract when one side offers contract terms that the opposing side accepts. Both parties must have an objective intent to enter into a binding agreement rather than merely an intent to negotiate a contract. Contract formation also requires consideration, or the “price” paid to secure the benefits of the contract. Parties can form an oral contract, where the parties discuss and agree upon the terms of a contract without writing down those terms, or parties can form a written contract, where the document contains the terms of the parties’ agreement.
Oral contract formation may occur when one party describes the terms of a contract and the other party makes a statement to the effect of “I agree.” A party can also agree to an oral contract by performing their end of the contract without expressly stating that they agree to the deal.
Parties usually form written contracts by signing a physical or electronic copy of the agreement. However, a “signature” can take the form of writing the name of the person agreeing to the contract, adding an electronic mark to a contract on a computer, or clicking/checking an “I agree” box on a software or website page.
What Happens When Only One Party Signs a Contract?
When only one party to a written contract signs or otherwise marks their asset to the agreement, disputes over the enforceability of the contract can arise. The party who didn’t sign the contract may try to back out of the agreement by claiming they never agreed to the purported contract or were still attempting to negotiate agreement terms.
Can You Enforce a Contract If the Other Party Didn’t Sign It?
In certain circumstances, a party who signed a contract may have the right to enforce that contract on the other party, even if that party never signed the written agreement. One typical example of an enforceable contract signed by one party includes a website’s or software’s terms of service, where a user will click an “I accept” button or make an electronic signature to agree to the terms of service but the software provider/website operator never signs the electronic agreement. A written contract may expressly state that it becomes binding on both parties when only one party signs it; a business may ask a customer purchasing a product or service to sign a written agreement, with the contract becoming enforceable even though the business never signs it.
Furthermore, you may have the right to enforce a written contract not signed by the other party if that party begins performing their obligations under the contract. A court may infer the other party’s acceptance of the contract based on their performance since a party that did not agree to a contract likely would not perform their obligations under it. Courts may also examine the parties’ past practice, including whether the party who didn’t sign had a history of not signing yet performing under prior agreements.
Even if you cannot enforce a written contract because the other party never signed it, you may have other legal options to obtain financial recovery. You might have a “quasi-contractual” claim under a theory of quantum meruit or unjust enrichment. In a quantum meruit claim, you may recover the fair value of goods or services you provided to another party when that party accepts the goods or services, even if you never had an enforceable contract. An unjust enrichment claim may provide you with financial recovery for the value of a benefit you conferred upon another party.
Contact Woods Lonergan PLLC to Discuss Your Business’s Legal Options
When you find yourself in a legal dispute over a contract signed by only one party, experienced legal counsel can guide you and help you understand your rights and options. Contact Woods Lonergan PLLC today for an initial consultation to learn how we can assist you in protecting your company’s interests.