08/05/2014 by Attorney James W. Walker
Authored by attorney James W. Walker
Have you ever performed work for a client without getting the client’s signature on a contract? If a problem later surfaced, could you enforce its terms?
In many states, the answer is a resounding …maybe. Signed contracts are important because they establish with certainty who the client is, what services you have agreed to provide, what you will be paid, what the client’s responsibilities are, when your work is finished, methods for dispute resolution, and so forth. Even without a signed engagement letter, however, you still have the contract you negotiated orally. You just don’t know for sure if you and your client agree on its terms or remember the negotiated terms the same way. You may never know if there is disagreement over the terms of your agreement until there is a problem.
Most courts will enforce unsigned or partially signed contracts in the right circumstances, but which circumstances are the “right circumstances” is difficult to predict. Here are some tips to remember when a client avoids, “forgets,” or refuses to sign a written contract.
If possible, try to get it in writing. Remember . . .
- Follow up promptly. Contact the client, preferably by a letter or email, to verify that the client received the contract document and remind the client to sign and return it. Confirm your intention to perform according to the terms of the written contract while awaiting the formality of a signature.
- Be diligent. Make more than one attempt to recover the signed contract. A reasonable client will understand the necessity for your actions.
- Assume nothing. Don’t assume that your silence or prompt payment of monthly invoices means the client has accepted your terms of engagement. Ask the client if he has any questions that may account for the delay in signing. Also, don’t assume that the client consents to the terms in the contract even if the terms are basically the same as past work for the same client. Even if the client is familiar with your “standard” contract, a court will not necessarily assume that the client understood or agreed to the “standard” terms without a signature or some other evidence of assent.
- Takes two to tango. Don’t forget to sign the contract yourself, preferably before sending it to the client. Sending a client a contract that you have not signed can be construed as a mere proposal rather than a commitment on your part to perform according to the letter. At a minimum, add your signature when you receive the signed contract back from the client, then send the client a copy of the contract with both signatures.
If you still can’t get the client to sign, do the following . . .
- Make a phone call. Refusal to sign the contract could be a sign of a serious problem. Call and ask why. Is there an unacceptable term? Or is the client purposefully avoiding signing for some tactical advantage. It’s better to expose obstacles at the beginning of the relationship rather than after the client is way behind on paying for your services. If the client is refusing over something you can’t go forward without, consider walking away from the engagement. Otherwise, make changes you can live with so you can get a signature.
- Record everything. Keep a copy of any emails, letters, and even voicemail messages from the client that suggest that the client agreed to at least parts of the contract. You’ll have a better argument later that the client also agreed to those sections that were not specifically referenced.
- Always be closing. Just because the client won’t sign doesn’t mean he won’t agree to what is on the piece of paper he won’t sign. Discuss all of the essential elements of the contract with the client and at least get his oral agreement. There is a better chance that a court will enforce a written contract if there is evidence the parties discussed and agreed orally upon at least some of the terms in the document.
- Actions speak louder than words. Encourage the client to perform in accordance with terms in your contract. Mostly, the client’s performance will be payment for services, so insist on payment per the written documents. Where other client action is called for (supplying records, providing approvals, attending inspections, etc.), expect the client to perform exactly in the manner set out in the engagement letter.
- Name dropping. Reference the terms of the contract often in communications with the client. “Well, as you know, Mr. Client, what you are asking me to do are additional services for which I’m entitled to receive additional compensation under section 1.A.i of our contract …”
All too often, clients have greater expectations of what you are responsible for that is appropriate. When a problem later arises, the client is quick to assign blame to you. A well-written, signed contract is often your best defense. In the absence of a signed agreement, being in a position to prove its terms can bring an early end to time consuming and expensive litigation.
James W. Walker is a partner at Vandeventer Black LLP. He is licensed in Virginia and Washington, D.C. and devotes a substantial portion of his practice to representation of design, construction and accounting professionals. If you have any questions, please feel free to contact the author directly at 804.237.8800 or by email firstname.lastname@example.org. This article does not constitute legal advice and is intended for general information purposes only. Readers should consult with legal counsel to determine how laws, suggestions, and illustrations apply to specific situations.