Sometimes You Get Away with Unwritten Contracts. . .

contract photoI have spoken often regarding the need for a well written construction contract that sets out the “terms of engagement” for your construction project. A written construction contract sets expectations and allows the parties to the contract to determine the “law” of their project. An unwritten “gentleman’s agreement” can lead to confusion, faulty memories, and more money paid to construction counsel than you would like as we lawyers play around in the grey areas.

One other area where the written versus unwritten distinction makes a difference is in the calculation of the statute of limitations. In Virginia, a 5 year statute of limitations applies to written contracts while a 3 year statute of limitations applies to unwritten contracts. This distinction came into stark relief in the case of M&C Hauling & Constr. Inc. v. Wilbur Hale in the Fairfax, Virginia Circuit Court. In M&C Hauling, M&C provided hauling services to the defendant through a subcontract with Hauling Unlimited in 2014, the last of which was in July. M&C provided over 2000 hours of hauling and provided time tickets (that were passed to Mr. Hale on Hauling Unlimited letterhead and signed by Mr. Hale or his agent) and an invoice stating the price term of $75.00 per hour. No separate written contract between M&C and Hauling Unlimited or Mr. Hale existed.

In February of 2018, beyond the 3 year statute of limitations for unwritten contracts but prior to the expiration of the 5 year limitation period for written contracts. Needless to say, Hauling Unlimited filed a plea in bar to have the matter dismissed as being brought beyond the 3 year statute and argued that no signed or other written contract existed, therefore the 3 year limitation period applied. After review of the various precedents (which I commend for your reading), the Court determined that where a signature on a contract is not a condition of the contract itself being a written one. In doing so, the Court stated

In the immediate facts, although there was no signature by Defendant Hauling Unlimited, the parties did not make their signatures a condition of the contract being a written one. All the terms of the agreement between the Plaintiff and Defendant, including the rate and the hours worked, were committed to writing in the daily sales tickets and the invoice. These terms were unconditionally assented to by the parties.

In short, the Court determined that Hauling Unlimited and Mr. Hale assented to M&C’s terms and did not insist on a signature to make their contract a written one.

The lesson from this? At the very least be sure to provide consistent documentation of your work if you aren’t going to have a written contract. The better lesson? Don’t put yourself in this position. Call your friendly experienced construction attorney and get a written contract together that both keeps arguments such as these from looking like good ones and also extends your statute of limitations.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 license.

Related Musings:

Original Article