Consider the following scenario. In a dispute between an owner and contractor, neither party can locate a copy of the signed construction contract in their files.
Without a signed contract, can the contractor still compel arbitration? As it turns out, in certain circumstances, yes.
In Ladymon v. Lewis, the court of appeals addressed this scenario. Some homeowners sued their builder, but no one could locate a signed version of the construction contract.
The builder filed a motion to compel arbitration. The first step, however, in compelling arbitration is to establish the existence of a valid arbitration agreement and show that the agreement covers the claims that have been asserted.
So how can you establish the existence of a valid arbitration agreement if you don’t have a copy of the signed contract? Well, like most things in a lawsuit, you make the best argument you can with what you have. So that’s what the builder did.
The builder submitted an affidavit that basically said: (i) we can’t find the signed version of the contract but here is an unsigned form contract; (ii) I remember signing this form contract when we built this home; and (iii) I remember getting a copy back from the homeowners with their signature.
Not the strongest evidence you would like supporting a motion to compel arbitration. Not surprisingly, the homeowners did not think the evidence was sufficient and filed their own affidavit saying that they did not remember signing any documents with the builder prior to construction except for financing documents.
The trial court denied the builder’s motion to compel arbitration and the builder appealed. On appeal, the builder argued that its affidavit established that there was a valid, enforceable arbitration agreement between the parties.
[T]he absence of a party’s signature does not necessarily destroy an otherwise valid contract. . .
And the court of appeals agreed. The court said:
[T]he absence of a party’s signature does not necessarily destroy an otherwise valid contract and is not dispositive of the question of whether the parties intended to be bound by the terms of a contract. If a contract is not signed by a party, then other evidence may be used to establish the nonsignatory’s unconditional assent to be bound by the contract, including any arbitration provision.
The court of appeals said that the builder had sufficiently established the existence of a valid contract between the parties that contained an arbitration provision.
And what about the homeowners’ testimony that they did not recall signing the contract? The court of appeals basically said that saying you do not recall doing something is really no evidence at all.
So if you find yourself in a situation where you cannot locate a signed copy of a contract, all hope is not lost. Use what you have and make your best arguments. There’s a still a chance you can enforce an unsigned contract.