Must a contract be signed in order to be binding?

I started a business as an independent contractor in another business. I drew up my terms for a contract and the owner of the business I work in drew up his. I exchanged the agreed upon amount to work within his facility and began working, however neither party signed the contract. I would like to terminate my independent contractor agreement but am afraid he will take legal action against me for a breach of contract. Will he be able to file a law suit against me for breach of contract if neither party signed the contract? The monetary value that was exchanged was $2,650.

Asked on February 25, 2013 under Business Law, Iowa


S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

A contract has to be signed in order to be binding.  The contract has to contain essential terms such as identification of the parties, the subject matter, time for performance, compensation, etc.  The contract requires a meeting of the minds (agreement) by the parties to the contract on the terms of the contract.  Although the other party won't be able to file a lawsuit against you for breach of a nonexistent contract, if the parties acted in accordance with the terms of the agreement, the other party could sue and claim quasi-contract.  Also, if the other party detrimentally relied (changed his positiion in reliance on the terms), the existence of a contract could be established.

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