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Unsigned Proposal Found Binding – The Last Hurrah

Alan L. Stefaniak

In the June 2012 edition of this newsletter my article was “An Unsigned Contract-Is It Binding?” I advised that it depends and what it depends on are the facts. In September of last year I tried a case for a long time client who had given a proposal to manufacture and erect flexicore slabs for a warehouse building in Bloomington. The client’s proposal was not signed so we had a real life experience with an unsigned contract. We prevailed at trial. The trial judge found in our favor based upon you know what, “the facts.”

I have represented this client for over thirty years. While it’s a family owned business during those thirty years I have worked with three different management groups. I am very proud that I was able to satisfy three different management teams and keep the client for all these years. Unfortunately with the downturn in the economy in 2008 and the profound effect this recession had on the construction industry the client ceased operations in 2010. At this time we had a couple of claims pending and were able to settle all but one. We had to go to trial on the last one involving the unsigned proposal. The trial took place in McLean County in downstate Bloomington. We had a day and a half bench trial and the Judge found in our favor because I was able to prove that through the parties conduct the general contractor accepted my client’s proposal.

In March of 2008 the client issued a written proposal to manufacture and erect flexicore slabs for a 500,000 square foot warehouse building. Our salesman/estimator was not available for trial but I was able to get into evidence company records that showed that in early June a phone call was received from the general’s project manager giving the order to go ahead with the flexicore slabs. Our salesman/estimator then wrote a letter acknowledging the order and asking for full sized copies of the plans and also the specifications for the project. The general sent them a few days later. While the client asked on several occasions that its proposal be signed and returned it never was.

Once my client received the full sized project drawings and the specs shop drawings were prepared and submitted to the general for review and approval. My client and the general then went through a six month process of shop drawing submittal, review, revision and resubmittal until the fourth set of shop drawings was approved. I subpoenaed the general’s project manager who no longer worked for the general as a witness in our case in chief. I was able to have him admit that many of the revisions to the shop drawings were due to changes being made in the building and what was finally submitted and approved met all the job requirements. In addition I was able to have him testify that one of the things the general required of subs it hired was to have the sub submit a certificate of insurance. I was then able to have my client’s business record admitted into evidence showing the general made a request for us to submit a certificate of insurance in early October of 2008 and that we did submit it.

The project for which these slabs were made was never completed because the owner filed bankruptcy. While my client manufactured the slabs they were not delivered and erected since the project went bust. The general didn’t want to pay for the slabs and his main defense was that there was no contract. The owner of the general contractor testified that subs are required to sign their standard form agreement which has a “no pay until I get paid” provision. On cross examination I brought out that they had no record of ever sending their standard form agreement to my client and no copy of such an agreement in their files.

The general also tried to establish that my client was taking the risk of manufacturing the slabs without a written contract being signed. However, I was able to show through emails that were sent back and forth the general knew my client was manufacturing the slabs even before the final set of shop drawings was approved and never took any action to stop my client. The President of my client testified that what was manufactured before the final set of shop drawings was approved was what she termed the “safe slabs”; those that would not change even if changes were made to the shop drawings.

The trial Judge found in our favor and ruled that the conduct of my client and the general showed that my client’s written proposal was accepted. While the trial Judge reduced the amount of damages we were seeking(not uncommon in a bench trial for a judge to give everybody something) he did find that because my client’s proposal was accepted the provision in the proposal for interest at 18% was binding as well as the provision for my client to recover the attorneys fees incurred.

In my June 2012 article I advised that when you have an unsigned contract it can be found to be binding depending on the “facts”. This case I tried bore this out. My petition for interest and attorneys fees is pending before the trial court and I’ll let you know how it turns out. This case was the last one for a long time client. It was our LAST HURRAH and I am pleased we went out with a victory.

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