Simon PLC Attorneys & Counselors – February 2025 Memorandum
DOES A CONTRACT NEED TO BE SIGNED TO BE ENFORCED?
Troy, MI. Can a contract that is signed by only one party be enforced? Does the absence of a countersignature by the party to be charged with performance under a contract necessarily render it unenforceable? Contrary to what many might assume, a contract that has been executed by only one party can, nevertheless, still have legal validity. As every first-year law student knows, contract formation requires three elements: offer, acceptance and consideration. Though acceptance is most commonly demonstrated by a party’s signature on a written agreement, this is not exclusive – acceptance can be demonstrated in multiple ways such as actions by the parties consistent with the contract’s terms or the failure of the party to be charged to object to the contract terms.
It is true that Michigan and most other states have enacted some version of the common law statute of frauds (MCL 566.132) which requires production of at least a memorandum of the agreement signed by the party to be charged in order for the aggrieved party to have standing to sue. Kelly-Stehney & Assoc, Inc v MacDonald’s Indus Products, Inc, 265 Mich App 105, 111; 693 NW2d 394 (2005). The statute of frauds, however, is somewhat narrow and only applies to certain types of contracts, such as: transactions involving real estate, agreements to honor the debt of another, contracts unable to be fully performed within one year and those made in consideration of marriage. Outside of these express categories, a contract’s legal viability does not always depend upon signatures from all of its parties.
Perhaps the most obvious and straightforward way a party can be shown to have accepted a contract without having signed it is conduct or performance that is consistent with its terms. Michigan, like nearly all states, has adopted the Uniform Commercial Code which specifically provides that a contract can be deemed accepted by a party’s performance of its obligations with knowledge of them or a course of conduct consistent with the contract terms. MCL 440.1303. Say, for example, the contract states that monthly payments are to be made by an entity, and the party acts accordingly and makes monthly payments, such actions, if proven, will constitute highly persuasive evidence that both parties are bound to the terms of the written agreement. Even though the party making the payments did not sign the agreement, in which an arrangement of monthly payments is described, it would be very difficult to now dispute the validity of the contract. Indeed, numerous cases recognize acceptance by conduct: “A basic requirement of contract formation is that the parties mutually assent to be bound.” Rood v General Dynamics Corp, 444 Mich 107, 119; 507 NW2d 591 (1993). Although “the object of a signature is to show mutuality or assent … these facts may be shown in other ways.” Ehresman v Bultynck & Co, PC, 203 Mich App 350, 354: 511 NW2d 724 (1994) quoting 17 CJS, Contracts,§ 62, pp 731-733.
A party’s acceptance of the benefits contemplated by the unsigned agreement can also be deemed as acceptance. Similarly, if a party does not object to the terms of the unsigned contract yet embarks upon a business or working relationship with the other party, its silence may serve as evidence that the contract was accepted in its entirety. Rowe v Detroit School of Digital Technology Inc, et al. (Unpublished, No 343814, August 19, 2019) Mutual assent or “a meeting of the minds” is determined by “an objective standard, looking to the express words of the parties and their visible acts, not their subjective states of mind.” Kamalnath v Mercy Memorial Hosp Corp, 194 Mich App 543, 548-549; 487 NW2d 499 (1992) ( quotation marks and citation omitted).
It is also possible that a party’s asset to contract terms can be demonstrated through separate communications that make reference to the contract even though made at different times. “[T]he writing requirement of the statute of frauds may be satisfied by several writings made at different times.” Kelly-Stehney & Assoc, Id at 114. Separate writings which are related in subject matter may be read together to give rise to a memorandum of the agreement, not only where both are signed by the party to be charged, but also where only one of them is signed, if they are so connected that the signature appearing upon the one can be said to authenticate the one which is unsigned. Randazzo v Kroenke, 373 Mich 61, 67; 127 NW2d 880 (1964). For this reason, it is important for parties to gather documents and email correspondence the reflect the other’s intention and communications regarding the unsigned contract.
A written contract can be considered legally binding even though the signatures of all parties are not present. Factors such as actions of the parties involved consistent with what was agreed upon, a non-signing party’s failure to raise objections or acceptance of the benefits of the agreement can all factor decisively in a court’s determination that an agreement is valid and binding despite the defaulting party’s failure to have signed it. We at Simon PLC Attorneys & Counselors are adept in all facets of contract enforcement and can provide you with a prompt assessment of the viability of your agreement and skillfully assist you with all of your contract enforcement and drafting needs.
N.B. Not Legal Advice: Please contact us if you would like to discuss the facts and circumstances of your specific matter. Simon PLC Attorneys & Counselors expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this memorandum. The information contained herein may not reflect current legal developments and is provided without any knowledge as to the recipient’s location, industry, identity or specific circumstances. No recipients of this content, clients or otherwise, should act, or refrain from acting, on the basis of any content included in this memorandum without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the jurisdiction for which the recipient’s legal issue(s) involve. The application and impact of relevant laws varies from jurisdiction to jurisdiction, and our attorneys do not seek to practice law in states, territories and foreign countries where they are not properly authorized to do so.
