Last week I wrote a post about what is considered timely acceptance of a subcontractor’s quote. My friend and former colleague, Brian Waagner, submitted a comment to that post, focusing on the importance of a written contract.  Brian also blogs at The Contractor’s Perspective.  Brian’s comments are on-point, so I have included them here as a guest post:

This case strikes me as an example of what happens when parties are not clear as to the terms of their contracts. While a written contract is not always necessary, the absence of a written contract when the circumstances indicate the parties expect to sign one is often a problem. 

Two other decisions make this point. In Jack Baker, Inc. v. Office Space Dev’t Corp., 664 A.2d 1236 (D.C. 1995), for example, a developer advised an excavation subcontractor that it had been selected, but no formal subcontract had been signed. The subcontractor sued when he saw another contractor performing excavation work at the site, but his claim was dismissed on summary judgment because there was no written contract. In the court’s view, the size of the project, the formality of the procurement process, and the ongoing negotiations as to the terms of the contract would make it impossible for a reasonable person to conclude that the parties had reached a complete agreement on all terms and conditions of the contract.

In Haughton Elevator Co. v. Donata Corp., 271 F. Supp. 958 (E.D. Va. 1966), Haughton submitted a bid for the installation of elevators. Donata directed Haughton to proceed while the parties discussed "final details" that would be necessary for the preparation of a "formal purchase order," but no purchase order was ever signed. The court rejected both Haughton’s claim for lost profits and Donata’s counterclaim for additional costs incurred to install the elevators. Both parties were "very experienced in the construction field" and their discussions made it clear that they did not intend to be bound until a formal contract was executed.

Excellent points Brian!  These are real-life examples of disputes about parties’ expectations that were not fully nor clearly reduced to writing.