Sage Advice US

When actions speak louder than words

Making sure that a valid construction contract is in place before you start work can be as important to you as being awarded the actual job. A carefully drafted and signed contract goes a long way in minimizing misunderstandings and protecting you from legal liability. However in some cases your contract isn’t always the defining factor when it comes to a court case. Here are a two situations where the party’s actions were more important than what was in writing.

Time for acceptance

When a dispute arose on a construction project, one of the parties asserted for the first time that there was no agreement. To support his claim he referred to a provision in the contract that specifically stated, “If this Agreement is not executed by both parties and a copy delivered to each party on or before 7/03, this agreement shall be null and void.” He argued that he hadn’t ever received back a signed copy by the July due date. He demanded the return of the deposit he had paid. When he didn’t get that back, he filed a suit.

You might think this would be an open and shut case. However, the court determined that while the agreement may not have been delivered back on time, it had been accepted. Yes, it had been sent after the deadline, but no objection was raised either at the time of receipt or any time thereafter. The facts actually revealed that the parties had gone about incorporating changes to the agreement, even creating an addendum which was signed sometime later by each of them, all after the noted deadline.

Simply having a drop dead date in an agreement, even one stating there would be no deal if a copy is not received or signed by a particular date isn’t going to be effective if the parties subsequently waive that requirement by their actions.

Unsigned proposals

It often happens. After a contractor submits his proposal the parties continue to negotiate, refining both the scope of the work and the final price. But while this is taking place, the contractor may begin to lay out the work and deliver some materials. Before you know it, although nothing has been signed, not only is some of the initial work getting done but even some payments have been made. Is there a contract in place? In one case, the court said yes, finding that an unsigned proposal can become a valid contract if the parties ratify the transaction by their behavior.

In most instances, the law looks at what the parties have actually done not just what they wrote.

This article is for informational purposes only and is not legal advice. Consult your own lawyer as laws may have changed or be interpreted differently depending on your jurisdiction and the facts of your specific situation.