Let’s say you are a corporate lawyer. You spend your pitiful and lonely life surrounded by marked up papers and red pens, drafting or revising agreements. You send your final versions out to your clients to sign, with those annoying little "sign here" stickers.
Then, the big day finally comes. Your work is in court and the case turns on an agreement that you drafted. But it wasn’t signed by everybody concerned. It’s a nightmare. What’s going to happen?
Your astonishingly bright (and good looking) litigation partner says "No sweat. We don’t need no stinkin’ signatures." Is he or she right?
He or she might be, based on Judge Gale’s decision last week in Hawes v. Vandoros, 2013 NCBC 31. The parties were all joint owners of two investment beach houses. When they refinanced the houses, most of them signed "contribution agreements" providing that they would each pay a pro rata share of the monthly payments due under the new loans.
There were eleven signature lines on the Contribution Agreements, but two of the owners (the Schemerhorns) did not sign. Two of those who had signed defaulted on their payments, and argued that the Agreements were not valid because all of the co-owners had not signed.
Judge Gale held that "a signature is not always essential to the binding force of an agreement . . . and . . . in the absence of a statute it need not be signed, provided it is accepted and acted on, or is delivered and acted on." Op. ¶29 (quoting Fidelity & Casualty Co. of NY v. Charles W. Angle, Inc., 243 N.C. 570, 575-76, 91 S.E.2d 575, 579 (quoting W.B. Coppersmith & Sons v. Aetna Ins. Co., 222 N.C. 14, 21 S.E.2d 838 (1942)).
Those who hadn’t signed the Agreements had abided by them — they consistently made the payments due from them and had accepted the Agreements via their performance. Op. ¶29. Therefore, all signatures were not required.
Judge Gale also rejected the argument that obtaining all signatures was a condition precedent to the validity of the Agreements. He said that "[a]bsent plain language, a contract ordinarily will not be construed as containing a condition precedent." Op. ¶30 (quoting Craftique, Inc. v. Stevents & Co., Inc., 321 N.C. 564, 566-67, 364 S.E.2d 129, 131 (1988)).
I wouldn’t give up those signatures just yet.