The importance of using written contract and PO forms

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When a deal starts, it doesn’t always seem necessary to “paper” every little detail. Everyone is excited and on the same page, and no one can envision the relationship ever going south. However, many things can happen during the years it takes to complete certain projects – people can leave and start new jobs, memories can fade, and, in some instances, people remember things how they want them to be rather than how they actually were. But, what remains as reliable as the day it is signed is a written contract. As long as the deal the parties agreed to is in writing, when the project is over years later no one can change the deal through inconsistent testimony. The importance of using written contracts and purchase order (PO) forms simply cannot be overstated. 

In addition to using a written agreement, the best practice is to have both parties sign that written document so there can be no dispute later as to which version or which party’s form actually controls the deal. It is all too common for a subcontractor to submit its own terms and conditions with its proposal and then the general contractor sends its own terms and conditions back when it accepts the proposal. They may even go through several rounds of back-and-forth trying to resolve which terms will apply before ultimately starting work without resolving the issue. No one may notice that so-called “Battle of the Forms” situation until after the project when a dispute arises. At that point, the parties’ lawyers will ask to see the relevant contract and discover that each party was working off of its own form. Under those circumstances, the court is likely to fill in what it believes the terms of the deal are or should be, which may be very different from what either party thought when they started the work. That is certainly not an ideal situation, but it is incredibly common. Fortunately for construction industry participants, it is very simple to avoid: do not start working until you have a signed agreement.

While the best practice is to have both parties sign the contract document, the reality is there are very few circumstances where a contract must be signed in order to be enforceable. Those are listed in the applicable jurisdiction’s “Statute of Frauds.” If your deal is not one that requires a signed contract, do not let the other side lead you to believe your terms and conditions are not enforceable merely because the other party never signed your form. Your terms and conditions very well may still be enforceable, and your attorney can help you figure that out. Nevertheless, you will be best served by taking the additional time on the front end to make sure everyone agrees to the same terms and signs the same document to indicate their agreement.  


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