Contracts Where Neither or Only One Party Signs Can be Binding

In today’s world where circumstances can change at lightening speed, companies sometime feel compelled to act before their counsel can formalize or finalize a written contract. Similarly, there are instances where only one party to a deal has executed the written instrument. So what happens when someone seeks to enforce the terms of a written document that is not fully executed? As with many questions in the law, the answer is: “It depends….”

In Lease, Inc. v. Rowe International Corp., the parties were negotiating a Master Service Agreement, and Lease America’s president eventually signed a version of it, indicating next to his signature “(with conditions).” Thereafter, the parties commenced their business dealings.

Three years later, disputes arose, and Lease America sued Rowe International in federal court in Massachusetts for antitrust and deceptive trade practices. Among other defensive maneuvers, Rowe moved to have the case transferred from Massachusetts to Michigan based on a forum selection clause in the Master Service Agreement that required all disputes to be litigated in that state. Lease America countered by arguing that Rowe could not invoke the forum selection clause because (i) Rowe never executed the Master Service Agreement and (ii) the “with conditions” language next to Lease America’s president’s signature rendered the document nothing more than a counter offer (which Rowe never accepted).

While the court noted that this was an unusual situation in that the party who had signed the contract was arguing that no binding agreement existed, that really was immaterial. The key was that:

It [was] clear from the record … that both parties manifested an acceptance to the Master Agreement ….

Also, while not discussing the “with conditions” language extensively, the court also appeared to have no problem concluding based on the record before it that there was no dispute as to what those conditions were and that there was agreement to them. Accordingly, the fact that no one on behalf of Rowe had signed the contract was immaterial; both parties were bound by and could enforce the terms of the Master Service Agreement. As such, it is important that in-house counsel make sure their business clients are aware that even an unsigned contract can be enforceable if the parties act as if it is.



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