They Didn’t Sign the Contract – Do We Still Have a Deal?
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When the deal is done and the parties shake hands, people are mostly optimistic that the other party will perform as agreed. It’s typically only when something goes wrong, that’s when the parties will look to the terms of the written agreement to determine who is liable. It happens more than you would think—to both small, family-owned businesses, and even national corporations—when people come to an agreement regarding a business transaction, only to later find that one or both of the parties failed to sign the contract governing the relationship.
So, what happens if one or both of the parties did not sign the written agreement that was meant to control the transaction. Is the contract still enforceable? That depends on how the parties acted in relation to eachother.
Whether a valid contract exists “is a threshold question of law for the trial court.” L & H Constr. Co. v. Circle Redmont, Inc., 55 So. 3d 630, 634 (Fla. 5th DCA 2011). To prove the existence of a contract under Florida law, the party seeking enforcement must prove: (1) offer; (2) acceptance; (3) consideration; and (4) sufficient specification of the essential terms. Kolodziej v. Mason, 774 F.3d 736, 740–41 (11th Cir. 2014) (citing St. Joe Corp. v. McIver, 875 So. 2d 375, 381 (Fla. 2004).
Signatures are not required for a written contract to be binding on the parties.
Under Florida law, a contract may be binding on a party despite the absence of a party’s signature. Gateway Cable Television, Inc. v. Vikoa Constr. Corp., 253 So. 2d 461, 463 (Fla. 1st DCA 1971) (“The object of a signature is to show mutuality or assent, but these facts may be shown in other ways, for example, by the acts or conduct of the parties.”). “In absence of a signature, the courts look to a party’s words and conduct to determine whether the party assented to the agreement.” Fi-Evergreen Woods, LLC v. Robinson, 135 So. 3d 331, 336 (Fla. 5th DCA 2013) (citing H.W. Gay Enters., Inc. v. John Hall Elec. Contracting, Inc., 792 So. 2d 580, 581 (Fla. 4th DCA) (holding that by their words and conduct, the parties assented to the terms of the contract—an arbitration clause—which did not require a signature).
In absence of a signature, partial performance under the contract is sufficient conduct to manifest assent.
Florida courts uniformly hold that performance under a contract constitutes assent. See Integrated Health Servs. of Green Briar, Inc. v. Lopez-Silvero, 827 So. 2d 338, 339 (Fla. 3d DCA 2002) (holding that an unsigned contract was valid and binding because, although the defendant nursing home did not sign it, it “acted as if they had a valid contract” by providing the plaintiff care for over two months); L & H Construction, 55 So. 3d at 634 (finding party who did not sign agreement “clearly accepted the proposal by its actions, i.e. paying the initial $5,000 deposit and the two subsequently invoiced $15,000 payments”); see also Sundial Partners, Inc. v. Atl. St. Cap. Mgmt. LLC, No. 8:15-CV-861-T-23JSS, 2016 WL 943981, at *5 (M.D. Fla. Jan. 8, 2016) (collecting cases), report and recommendation adopted, No. 8:15-CV-861-T-23JSS, 2016 WL 931135 (M.D. Fla. Mar. 11, 2016) (enforcing unsigned agreement to arbitrate, where party (i) confirmed receipt of the agreement; (ii) reviewed the agreement; (iii) never objected to the arbitration provision; (iv) never mentioned any concerns with the agreement; and (v) performed under the agreement).
Parties who do not sign a contract are nevertheless bound by it if they both perform under the contract. See James Register Constr. Co. v. Bobby Hancock Acoustics, Inc., 535 So. 2d 339, 340 (Fla. 1st DCA 1988). In James Register, the parties entered into a construction contract, but neither party signed it. Id. at 339–40. Both parties completed the construction, and the subcontractor filed suit. Id. at 339. The trial court awarded the subcontractor a portion of the general damages sought and a reasonable attorney’s fees, pursuant to an attorneys’ fees provision in the unsigned contract. Id. at 340. The Court agreed that there was mutual assent because the parties “acted as if they were operating under contract.” Id. at 340.
Silence or inaction is sufficient to demonstrate assent.
Assent can also be shown by silence or inaction if a party “takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.” Restatement (Second) of Contracts § 69(1)(a) (Am. Law Inst. 1981); see also In re Standard Jury Instructions–Contract & Bus. Cases, 116 So. 3d 284, 312 (Fla. 2013) (approving § 69 of the Second Restatement of Contracts); see also Sec. Mgmt. Corp. v. Hartford Fire Ins., 641 So. 2d 184, 186 (Fla. 3d DCA 1994) (finding that a party accepted agreement by failing to object to it, providing monthly valuation reports, and accepting the benefits thereof).
Hartford Fire also stands for the proposition that when the parties manifest assent through performance of some provisions, the parties conduct demonstrates assent to the entire contract—including the provisions that have not yet been performed. Id. In Hartford Fire, the insured challenged a formulaic premium increase provision in a previously-cancelled insurance policy. Id. at 185. The Court held that the insured’s conduct demonstrated acceptance to the terms and conditions of the premium increase formula. Id. Specifically, the Court found that the insured (i) never objected to the formula; (ii) made a claim under the policy; and (iii) accepted payment of the claim. Id. at 186. “These facts all demonstrate that [insured] assented to the entire insurance policy, including the retrospective rating formula . . . [and] Hartford is entitled to any increase in premium contemplated by the parties’ agreement.” Id. See also, James Register, 535 So. 2d at 339–40 (finding attorneys’ fees provision valid where parties “acted as if they were operating under the contract”).
In light of the holdings above, it is clear that a signature is not always required for a contract to be enforceable. If a business finds itself in the unfortunate position of a missing signature on a contract, there are still ways to demonstrate who is obligated to perform and how. Parties to a business transaction should always be aware as to how their actions (or inactions) can create a binding agreement.