Can There be Liability for Unsigned Contracts?


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Can There be Liability for Unsigned Contracts?

As a general rule, you're bound by every contract you sign. Therefore, be careful what you sign. Running a contract that you are contemplating to sign by a lawyer could potentially save you thousands of dollars. However, something people involved in transactions should also be careful about is whether they can be liable for unsigned contracts as well.

Generally, a contract is formed when there is (1) an offer, (2) acceptance of the offer, (3) and valuable consideration, (4) and an intent to be bound. None of this requires a written signature. Often times, nothing in the contract need even be in writing (though it's always advisable to get a contract in writing). Therefore, any proof that the parties intended to be bound can bind parties to a contract.

For example, two parties enter into the agreement for a sale of widgets. One of the terms of the seller's contract is a mandatory mediation clause. The purchaser, without signing the contract, pays the dollar amount described in the contract to the seller and accepts the amount of widgets described in the contract. Upon further inspection, the widgets are defective. Purchaser sues Seller and wants to go to trial. The judge will force the parties to go to mediation because there is evidence the parties assented to the contract. Therefore, not only should parties be careful about what they sign, they should also be concerned about what they receive and don't sign as well.