Are Unsigned Contracts Enforceable In California?

As an owner or employee of a business, you may frequently negotiate business deals with customers, vendors, and other third parties. After negotiations, parties may fail to actually sign written contracts, relying on each other’s word. If the business deal falls through or the relationship goes sour, this may leave one party wondering whether they have any recourse against the other party, and specifically whether the unsigned contract is enforceable.

First, it is necessary to understand the essential factors to form a contract, which are (a) the contract terms must be clear enough that the parties can understand what each is required to do, (b) the parties must agree to exchange something of value (goods or services), and (c) the parties must agree to the material terms of the contract. Contracts can be implied by the parties’ conduct absent an oral or written agreement. Furthermore, the California Civil Code permits oral contracts, except where the Civil Code specifically requires a written contract. Some of the more common contracts that must be in writing are those that cannot be performed within 1 year, promises to pay the debt of another, leases of real property for more than 1 year, and contracts for the sale of real property (referred to as the “Statute of Frauds”).

If you negotiated a contract with a third party and you both began performing in a manner similar to the terms of the unsigned contract, a court would almost undoubtedly find that a contract exists. First, if the law does not require a written contract regarding the subject matter, then an implied contract by conduct may have been formed. A court would likely look to the terms of the unsigned contract as evidence of the terms of the implied contract.

Furthermore, if the law does not require a written contract regarding the subject matter and one party claims there was an oral contract, then a court may find that an oral contract was formed (especially if there are witnesses that can attest to the oral contract). Again, a court would likely view the terms of the unsigned contract as evidence of the terms of the oral contract. In addition, if there are emails, letters, or other written communications, a court would likely also use that evidence to further define the terms of the oral contract. Any such correspondence may also be evidence of an offer and acceptance of a contract by either party if the language in the correspondence suggests this, and the correspondence may even constitute a written agreement (for example, email signatures are valid signatures under the law).

Therefore, the terms of an unsigned contract may be enforceable against a party depending on the circumstances. The determination depends heavily on the facts and communications between the parties. If you have any questions about a contract dispute or need assistance drafting or reviewing a contract, please do not hesitate to contact the Law Offices of Tyler Q. Dahl.

Disclaimer: This material was prepared for general informational purposes only, and is not intended to create an attorney-client relationship and does not constitute legal advice. This material should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction. You should always consult a qualified attorney regarding any specific legal problem or matter.