Construction / 2 min read
In construction, it's common for work to begin before a contract is signed or without any written contract contemplated. Occasionally, a contractor mobilizes or a supplier starts delivering materials under the mutual understanding that the "official" paperwork will follow. But when the deal sours or payment is withheld, the absence of a signed agreement can create complications. Fortunately, you're not necessarily out of luck if you're in a payment dispute without a written contract.
First of all, Texas generally does not require contracts to be signed except in certain circumstances. Sometimes, you can prove the terms of a contract using emails, SMS messages, or other communications to establish the contract terms. But what happens if there was very little documented discussion about payment or other terms?
Texas recognizes two key alternatives: contracts implied in fact and the equitable doctrine of quantum meruit. A contract implied in fact arises from the conduct of the parties—if one side performed work, the other accepted it, and both acted as though a binding agreement existed, then Texas courts may recognize an implied contract even without a written signature. For example, if a subcontractor begins work, submits pay applications, and receives payments for the first few pay applications, that pattern of conduct may show mutual agreement to a contract, even if a formal agreement was never signed.
Even if an implied contract can't be established, Texas recognizes a principle known as quantum meruit. This remedy allows a party to recover the reasonable value of labor or materials provided when there was no express agreement, but the services were accepted and benefited the other party. Texas courts look for evidence that the work was knowingly accepted, and that the work was performed under circumstances in which it was clear payment was expected.
Of course, these theories are not without risk. The lack of a written and signed contract typically leaves room for dispute. The two sides are not likely to agree on the reasonable value of labor or materials that were provided, and disputes over delays, cost increases, or differing conditions can be particularly difficult to resolve without a written agreement.
To protect your rights, documentation is critical. Keep a written record of communications, including emails or text messages confirming that work was requested and authorized. Send confirmation letters when proceeding with work based on oral instructions. And maintain contemporaneous billing and time records.
While getting a contract signed before starting work is the best practice, Texas law recognizes pathways to recovery even without a written contract. If you're struggling to determine whether you have a contract or what your legal rights are, consider consulting with an attorney who can help you navigate your legal options.