From two different courts in two different states on two very different claims come the same concept: an agreement to arbitrate may be binding even without a signed contract. One comes via an unsigned law firm partnership agreement, and the other via an agreement placed on the wrapping of a bundle of roofing shingles, held to be binding on the property owner who hired the contractor who engaged, in turn, the subcontractor purchasing the shingles.
In the Virginia case, a newly-minted law firm partner had never signed the partnership agreement. Almost two years after becoming a partner, she filed a lawsuit alleging discriminatory action by the firm, and the firm moved to compel arbitration. The partner opposed the motion arguing that the firm had failed to provide certain requested information, and in any event she had never signed the partnership agreement. But the court held that there is more than one way to acknowledge acceptance of a contract. Quoting the Restatement (Second) of Contracts, § 30, the court noted: “when a contract lists one possible manner of acceptance, without stating that such a manner is the only permissible manner of acceptance, contract law treats the possible manner as a suggestion, and leaves the offeree free to accept the contract in the suggested manner or in any other reasonable manner.” (emphasis in original) Thus, the new partner had engaged in other actions to demonstrate her adoption of the position of partner and her acceptance of the terms of partnership that came with it, such as payment of capital, enrollment in benefit programs only available to partners, and adopting the public designation of a shareholder in the firm. The lack of a signature on the agreement could not be used in those circumstances to say she was not bound by that agreement. The case is Craddock v. LeClairRyan, P.C., 2016 U.S. Dist. LEXIS 49408 (April 12, 2016) (Lexis subscription required).
From Colorado comes a decision that arises out of the wrapping on bundles of shingles. The manufacturer wraps each bundle in paper that includes the following featured prominently in a text box on the bundle: "IMPORTANT, READ CAREFULLY BEFORE OPENING BUNDLE." Beneath this notice the following appears:
In this paragraph, "You" and "Your" refer to the installer of the shingles and the owner of the building on which these shingles will be installed. This is a legally binding agreement [between] You and TAMKO Building Products, Inc. ("TAMKO"). By opening this Bundle, You agree: (a) to the terms and conditions of the limited warranty in effect for these shingles, including the agreement to arbitrate any and all disputes between you and TAMKO; . . .
The limited warranty printed on the outside of the bundle wrapping also states:
MANDATORY BINDING ARBITRATION: EVERY CLAIM, CONTROVERSY, OR DISPUTE OF ANY KIND WHATSOEVER (EACH AN "ACTION") BETWEEN YOU AND TAMKO (INCLUDING ANY OF TAMKO'S EMPLOYEES AND AGENTS) RELATING TO OR ARISING OUT OF THE PRODUCT SHALL BE RESOLVED BY FINAL AND BINDING ARBITRATION, REGARDLESS OF WHETHER THE ACTION SOUNDS IN WARRANTY, CONTRACT, STATUTE OR ANY OTHER LEGAL OR EQUITABLE THEORY. . .
The claim was brought in this case by the insurance company for the property owner, arguably at least three steps removed from the manufacturer. But the court quickly came to the conclusion that the owner’s insurance carrier, when pursuing the manufacturer, was bound by the arbitration clause printed on the bundles that had been unwrapped by a subcontractor. No one had signed any agreement with the manufacturer. Nonetheless, the sub would have been bound to arbitrate, and since the sub was hired by the contractor acting as the owner’s agent, the insurance company for the owner was also bound to arbitrate when pursuing the manufacturer. The case is American Family Mut. Ins. Co. v. TAMKO Bldg. Prods., 2016 U.S. Dist. LEXIS 50408 (April 13, 2016) (Lexis subscription required).
These cases serve as a reminder that (1) a person or company can be bound by a contract without signing that contract, based on other actions, and (2) if that (unsigned) contract calls for arbitration, the person/company is bound to arbitrate disputes that arise under the contract.
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