Unsigned contract enforced

Our client, a plastic container manufacturer, brought a claim against a new distributor for breach of contract. The parties had initially agreed a distribution contract. Our client signed the contract and sent it to the distributor for signature.

The distributor amended the contract by extending the payment terms and returned a signed copy to our client. However, our client had not agreed to the revised terms and did not sign the amended contract.

Resolving a contract dispute involving an unsigned agreement

We assessed the merits of our client’s position and brought a successful breach of contract claim. The court’s decision enabled our client to recover its full costs. We also established that the contract was enforceable, helping protect our client’s future cash flow.

Bringing a claim for breach of contract

The distributor stopped placing orders for our client’s plastic containers, claiming that no binding contract existed between the parties. Our client therefore brought a claim for breach of contract.

Contract terms

The contract concerned the supply of plastic containers for use in the food industry. It contained the following provisions:

Introductory offer

Our client would supply the first month’s delivery on extended payment terms, allowing the distributor time to establish its business and improve its cash flow. The distributor amended this period to three months.

Three-year fixed term

The distributor was required to order a fixed minimum quantity of stock each month for three years.

Annual sum payable in twelve monthly instalments

An annual sum, set on each anniversary of the contract, was payable in twelve monthly instalments as a royalty for the use of our client’s trade marks.

Question for the court: conduct amounting to acceptance

The court considered whether our client had accepted the contract through its conduct and whether acceptance had been effectively communicated to the distributor.

We demonstrated that our client had supplied the agreed minimum quantity of containers each month, invoiced for delivered goods, manufactured further goods to meet anticipated demand and invoiced for monthly royalty payments.

The distributor had placed orders, taken delivery of the containers, paid royalty invoices and created literature and a website page promoting our client’s brand and product range.

We successfully argued that the parties’ conduct demonstrated acceptance of the modified contract and that acceptance had been communicated to the distributor through their actions.

The judge’s decision

The judge found that, despite the requirement for both signatures, our client had accepted the terms of the modified contract through its conduct. The distributor had also acknowledged the arrangement and received the benefits of our client’s performance.

The only uncertainty arising from the absence of both signatures concerned the precise date on which the contract was formed.

Protect your business

An unsigned contract may still be enforceable where the parties’ conduct demonstrates agreement to its terms. However, establishing this may require court proceedings, which can be costly. Clear written agreements and properly documented variations can help businesses avoid uncertainty and reduce the risk of disputes.