One question I hear fairly often from builders is,
“Can a contract with a client be enforced if
it’s not in writing?” The short answer is
yes, it can. Back in the days when I worked at the legal shark
shop, we enforced unwritten contracts all the time —
though we sometimes ran into problems.
The longer answer is that enforceability depends on a number
of factors: what kind of customer you’re working with,
how much money is involved, and what state you’re in.
For instance, several states require written contracts between
homeowners and builders for jobs involving more than a
specified amount of money.
Elements of a Contract
I don’t recommend working without a written contract
— ever. However, it’s not the paper that
creates the contract; it’s the intent of the parties.
So let’s say you agree to do a job, you perform the
work without getting anything in writing, and then the customer
refuses to pay. Do you have an enforceable contract? You might,
if you have “mutual consideration” and a
“meeting of the minds.”
Mutual consideration means you and your customer
have agreed to give each other something of value. Usually, you
agree to do the work and the customer agrees to pay for it.
You’re both getting something; otherwise,
we’d be talking about a gift.
Meeting of the minds means you and
the other party to the contract reach a point where you both
believe you have a contract. If one of you honestly thinks
you’re still in the negotiation stage, you
haven’t achieved a meeting of the minds.
But suppose after this so-called meeting of the minds, your
customer says, “Hey, I didn’t really agree to
pay for it — you just thought I did.” In that
case, if you want to collect, you’ll have to sue
— and convince the court that the customer led you to
believe there was an agreement. If the court is convinced, that
verbal agreement is a contract.
There’s another angle to all this. In most states
— even those with requirements about written contracts
— if you aren’t paid for work you’ve
completed, you can sometimes recover what you’re owed
under the principle of “unjust enrichment.”
This means basically that customers can’t play the
“gotcha” game. If they ask you to perform the
work and then try to stiff you because the contract
wasn’t in writing, the courts may view their behavior
You’ll need an attorney to win an unjust-enrichment
lawsuit — and if you prevail, you may not win the full
amount for the job. That’s because unjust-enrichment
theories are not based on the monetary amount agreed to;
they’re based on the value of what the customer
The most you can hope to win is what the expert witnesses
hired by your lawyer say your work was worth. Of course, the
defendant will have his own expert witnesses who will claim
your work wasn’t worth much at all. The final value
will be up to the court to decide.
Mechanic’s lien. Obviously,
you would have been better off if you’d just gotten
the agreement in writing in the first place. But if you do get
stuck, here’s a tip for making this kind of case
easier to win: Put a mechanic’s lien on the property.
The mere fact that a lien has been filed will give you more
leverage in this difficult situation.
Better to Get It in Writing
Please don’t take any of my advice here as an
endorsement of unwritten contracts. As far as I’m
concerned, a handshake is never a good enough agreement; even
with friends and longtime customers you should insist on a
written contract. And this is true not just because that piece
of paper finalizes the contract or the law may require it, but
because writing everything down makes it a lot easier to figure
out later what you guys actually agreed to.
Quenda Behler Story has practiced and
taught law for more than 25 years.