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Partially-signed contracts by jigordon
April 5, 2008, 9:32 am
Filed under: contract management, law

I don’t know about you, but I’ve got decades upon decades of old contracts in my contract files. There hasn’t always been a contracts manager to organize and keep track of the various documents, especially in terms of getting fully-executed (those signed by both parties) contracts back “home.”

You start with your own team and make sure that contracts come through a central place so that you at least know they’re being signed in-house and are being sent to the other side. You try incentives with the other side by means of not paying invoices until the contracts come back. That gets a lot back to you.

[Disclaimer: I’m about to talk about “the law” and I do not want you to think that I’m giving you legal advice. Please forgive the disclaimer, but I need you to know that I am NOT your attorney and what I’m about to discuss is NOT legal advice and shouldn’t be seen as such. If you have a real contract problem, PLEASE PLEASE PLEASE find a licensed attorney in your state qualified to discuss these issues with you in detail.]

But what about the legality of a partially-signed agreement? Is it valid? Well, see, in law school, you learn about things like the “parol evidence rule” and “partial-performance” and “implied consent.” Long story short, you should always talk with your counsel about whether a partially-signed contract is enforceable (and generally speaking, most old agreements are). It’s ultimately going to depend on a variety of factors, including who signed vs who didn’t, when it was signed, who from the various negotiation teams are available with actual memory of the events, etc.

Why would this matter? Well, if you’re concerned about a partially-signed agreement, you’re either: a) a contract geek like me and just want the security of knowing that you have fully-executed contracts; or, b) you’ve got a contract dispute brewing and you are at least somewhat contemplating the idea that you want to claim (or are worried that the other party will claim) that you don’t have a valid contract that is binding you (or the other side) to performance.

The largest piece of evidence the courts generally look at is to see if the parties ACTED as if there was a contract in place (courts don’t like the business of determining the parties’ intent). Which is why I said that with older contracts, partially-signed agreements are more likely to be enforceable – since there’s a greater likelihood that some level of performance has actually happened – intent to contract becomes clear. Thus, having a slew of old partially-signed agreements isn’t a serious problem, as it’s probable that a significant amount of performance has already happened and it would thus be unlikely that one side could say that they didn’t want an agreement.

All in all, I don’t worry about older partially-signed agreements unless I’m using them as the basis for current work. Then, I simply ask the other side to do a “restatement” of the old agreement and I take the opportunity to get a fully signed agreement in place. Simple.

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