Do you have to be under contract to be sued for breach of contract? By its very term, “breach of contract” presupposes the existence of a contract. Hence, the parties in a breach of contract case must be under contract or a valid, legal agreement.
Perhaps a better way to frame the question would be: Can there be a breach of contract if the parties didn’t sign anything? The answer is: Even if the parties did not sign anything, but formally close an agreement, then a contract exists. Many people think that a contract only exists if there is a piece of paper in which the parties affixed their signatures. Not necessarily. The parties may enter and formalize a contract even if they just shook hands. Or, in today’s electronic world, the parties gave their consent through an email or SMS (Short Messaging Service) message. This is called a verbal contract.
Contracts are either written or verbal. The existence of a written contract is easy to prove. The party that filed the legal action can simply produce the signed agreement. With the existence of a contract, the case can proceed from thereon.
The existence of a verbal contract is harder to prove, but not impossible. The plaintiff cannot show any piece of paper with signatures affixed on it (After all, it is a verbal contract). The plaintiff however can show proof that a transaction existed. He may have a sales invoice, delivery receipt or receipt of payment. Or, even an email, Skype chat or SMS message may suffice. For example, Rosa, an artist agreed to do visual pieces for her client, Bruce. The transaction was closed via email. Rosa and Bruce are now bound by a contract. Rosa now has to turn in her artworks within a time frame that they agreed upon and at a quality acceptable to Bruce. On the other hand, Bruce must pay Rosa her fee if she fulfils her part of the deal. If either Rosa or Bruce is remiss in their part of the agreement, then there may be a breach of contract.
When you enter a contract, you should keep your copy in a file, so you can refer to it when needed. You may want to discuss its terms with your business law attorney especially if the contract has many fine prints. On the other hand, when you close a contract with a handshake or an email (or SMS or telephone) reply, be sure to keep your proofs of transaction. You and the other party will most likely be leaving a paper or electronic trail. You have to keep track of that. With these, you have pieces of evidence to show that you and the other party were under a contract.
Yes, you don’t have to sign anything to be in a breach of contract case; you simply have to be bound by a valid and legal agreement.
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