Work is often performed without a signed contract. What happens when one party breaches a contract when there is nothing in writing or when a written contract is not signed? Agreements in these situations can still be breached and the court can award damages resulting from these contracts.
Verbal Contracts
The most common scenario is when there is nothing in writing. When there is no document at all, the parties have agreed to an oral contract. Oral contracts that do not run afoul of the statute of frauds are enforceable in Virginia. [1] Contracts that are required to be in writing by the statute of frauds include contracts that involve the sale of real estate, a lease longer than one year, a service contract that is to be performed in a period that exceeds one year or a loan of $25,000.00 or more. [2]
Unsigned Contracts
When there is some evidence in writing of a contract but it has not been signed, the court can enforce the contract. The court can find that the contract was an implied at law contract. An implied at law contract is also referred to as a quasi-contract, quantum meruit or unjust enrichment. An implied at law contract is an equitable finding by the court that occurs when a benefit was provided by the plaintiff and accepted by the defendant, the defendant had knowledge that it received the benefit and it would be unfair to allow the defendant to retain the benefit without compensation. [3] Upon a finding that there is an implied at law contrac,t the court can award the reasonable value of the services or goods. [4]
When there is some type of writing that is not signed, but there has been performance of the contract, the court can find an implied in fact contract. This can occur in many circumstances. In a recent case, the Virginia Supreme Court ruled that there was an implied in fact contract between a building owner and a property management company. [5] The court found no express contract because the signed contract was not between the entities that currently owned or managed the commercial office building. [6] The court held that there was an implied in fact contract and identified the following actions as performance of the contract sufficient to find an implied in fact contract: the management company provided a building manager, collected rents, addressed problems raised by tenants, oversaw building maintenance and maintained an operating account for the property that it used for operating costs and to pay its management fee. [7] It is important that the court did not include all terms in the writing as terms of the implied in fact contract. Only the terms and conditions where there was mutual agreement as evidenced by the actions of the parties were held to be enforceable terms of the contract. [8]
Another common scenario occurs when there is a contract that was performed, but, due to an oversight, it did not get signed. This can occur with parties who frequently work together or when there is a mistake. When this happens, the court will not ignore the contract due to a lack of signature and will enforce the terms. [9]
If you do not have a complete, signed contract but need to file a lawsuit, don’t worry. There are many avenues to recovery against a defendant even when you do not have a fully–executed, written contract. Courts can enforce oral agreements. Courts can require payment when there was a service or good provided, the recipient is aware that it received the goods or services and it is unfair to allow the recipient to retain the goods or services without paying. And finally, courts can find that there was a contract when there was no signature and there is evidence of acceptance of the contract by performance of the contract.
[1] T. v. T., 216 Va. 867, 873 (1976).
[4] Marine Dev. Corp. v. Rodak, 225 Va. 137, 139, 300 S.E.2d 763 (1983).
[5] Spectra-4, LLP v. Uniwest Commr. Realty, Inc., 772 S.E.2d 290 (Va. 2015).
[9] Hertz Corp. v. Zurich Am. Ins. Co., 496 F. Supp.2d 668 (E.D. Va. 2007); Galloway Corp. v. S.B. Ballard Constr. Co., 250 Va. 493, 464 S.E.2d 349 (1995).