Is an Unsigned Contract Enforceable?

As with many questions in the law, the answer to this inquiry is “it depends.” “The essential elements of a valid contract include offer, acceptance, and bargained for consideration.”[1]  The creation of a contract requires that two parties mutually assent to the same bargain at the same time-an assent which is usually in the form of an offeree’s acceptance of a definite and certain offer by the offeror.[2]

Courts have identified several factors to consider when determining whether an agreement is binding:  “(1) whether there has been an express reservation of the right not to be bound in the absence of a writing; (2) whether there has been partial performance of the contract; (3) whether all of the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of contract that is usually committed to writing.”[3]  The construction of a contract is a question of law, not fact.[4]

One way of determining whether the parties have reached such an agreement is that they reduce that agreement to an executed writing.  It is well established that even where a party does not sign a contract, however, its terms may still be binding based on the party’s conduct.[5]  Assent or mutuality can be shown by the fact that the parties accepted the writing as a binding contract and acted on it as such, even though it was not signed.[6]  In Vaughan v. Rehab One, Inc.,[7] a defendant allowed the plaintiff to work for the company for several months without a signed employment agreement.  The Court held that plaintiff’s conduct ratified the employment agreement, even though it was not signed.[8]

The execution of a formalized written agreement is not necessarily essential to the formation of a contract that is made orally: “[I]f the respective parties orally agreed upon all of the terms and conditions of a proposed written agreement with the mutual intention that the oral agreement should thereupon become binding, the mere fact that a formal written agreement to the same effect has not yet been signed does not alter the binding validity of the oral agreement.”[9]

The determination whether an unsigned contract is enforceable is determined on the facts before the court.  Best practices obviously dictate entering into a written, executed contract to help ensure enforceability.

[1] D’Angelo v. Gardner, 819 P.2d 206 (Nev.1991).

[2] In re Mapes Enterprises, Inc., 15 B.R. 192, 194–95 (Bankr. D. Nev. 1981) (citing Restatement (Second) of Contracts § 1, (1979).

[3] Winston v. Mediafare Enter’t Corp., 777 F.2d 78 (2d. Cir. 1985).

[4] Fed. Ins. Co. v. Coast Converters, 130 Nev. 960, 965, 339 P.3d 1281, 1284 (2014) (quoting Galardi v. Naples Polaris, L.L.C., 129 Nev. ––––, ––––, 301 P.3d 364, 366 (2013) (quoting Ellison v. Cal. State Auto. Ass’n, 106 Nev. 601, 603, 797 P.2d 975, 977 (1990)); see also Farmers Ins. Exch. v. Neal, 119 Nev. 62, 64, 64 P.3d 472, 473 (2003) (noting that the task of interpreting a contract is a question of law)).

[5] Welsh v. Barnes-Duluth Shipbuilding Co., 221 Minn. 37, 43, 21 N.W.2d 43, 46 (1945).

[6] Id.

[7] 1994 WL 91198 (Minn. App.,1994.) (unreported).

[8] Id.

[9] Banner Entertainment, Inc. v. Superior Court, 62Cal.App.4th 348, 358, 72 Cal.Rptr.2d 598 (1988) (internal citation omitted).



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