“We Never Signed a Contract”: Why That Might Not Protect Your Business

When a commercial relationship deteriorates, one of the first things I often hear is that no contract was ever signed. The remark is usually intended to settle the matter immediately: no signature, no contract, no liability. Unfortunately, business relationships are rarely that simple. A supplier may have sent a quotation, received an email saying to proceed and completed the work. A customer may have paid an invoice or accepted delivery while believing that the precise terms would be dealt with later. Both may then insist that the absence of a final signed document supports their position, even though the communications and the way they behaved could tell a very different story.

In English contract law, the assessment is objective. The question is not simply whether either party privately believed a contract existed, but whether their words and conduct demonstrate an intention to create legal relations and agreement on the terms essential to the particular transaction. Offer, acceptance, consideration and sufficiently certain terms all matter. Emails, messages, telephone conversations and the parties' actions may contribute to that picture. A person who instructs a supplier to begin work, then accepts what is delivered, should not assume that a missing signature prevents any payment obligation. Equally, a supplier should not assume that every term buried in an unsigned draft has been accepted simply because the customer allowed work to proceed.

The courts look beyond the signature block

The Supreme Court considered this issue in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14. The parties envisaged a formal written contract, but proceeded with a substantial project without signing it. The Court examined what had actually been agreed, the parties' performance and whether they had, by their conduct, moved beyond a requirement for formal execution. On the facts, a binding contract was found. The case does not establish that beginning work always creates a contract on every draft term; it demonstrates that the answer depends on the whole course of dealing, not the state of the signature page alone.

This creates a risk on both sides of a transaction. A supplier needs a reliable record of scope, price, payment milestones, variations and who has authority to approve additional work. A customer needs to know precisely what is being purchased, when it must be delivered, what happens if standards are not met and which conditions are being incorporated. Intellectual property rights and the treatment of work produced after the initial project deserve particular care. If those matters are left vague, the dispute may not be about whether anybody agreed to do business at all, but about which obligations arose and how far they extend.

A careless offer can outgrow the dispute

The same need for discipline applies once a disagreement has started. I have seen negotiations in which a proposal intended to resolve a relatively contained commercial problem went much further, offering the other party an interest in future work. The parties and details are deliberately omitted, but the concern is clear: a concession made under pressure can have consequences far beyond the immediate sum or service in dispute. The mere making of an offer does not, by itself, prove that a binding settlement was reached. Acceptance, certainty of terms, the intention to be bound and the context of the exchange must still be examined. Nevertheless, it is dangerous to assume that a proposal is legally irrelevant simply because it was made informally or in the heat of negotiation.

Businesses also need to understand the limits of familiar expressions. Genuine settlement discussions may attract 'without prejudice' protection, but writing those words at the top of an email does not automatically make every statement privileged, nor does privilege prevent parties from concluding an enforceable settlement. Likewise, 'subject to contract' can be an important reservation of intention, but subsequent conduct may matter. Some categories of transaction, such as contracts for the sale or other disposition of interests in land, have specific statutory formalities and cannot be treated as ordinary informal agreements. The legal position is therefore more nuanced than either 'everything in an email binds you' or 'nothing counts until signed'.

The practical answer is to establish and confirm commercial terms before the work starts. Agree who is contracting, the precise deliverables, price, deadlines, intellectual property position, change-control process and what happens if the relationship ends. When terms change, record the change and obtain clear approval from the right person. When a dispute emerges, separate exploratory proposals from concluded settlement terms, and seek advice before offering rights in future revenue or work simply to make the immediate problem disappear. A signed document is often the clearest protection, but it is not the only source of legal obligation. The expense usually comes from having to reconstruct, after the relationship has failed, exactly what the parties thought they had agreed.

Legal sources and further reading: UK Supreme Court: RTS Flexible Systems Ltd v Müller [2010] UKSC 14 · UK Supreme Court: Oceanbulk Shipping v TMT Asia [2010] UKSC 44 · Law of Property (Miscellaneous Provisions) Act 1989, section 2

This article provides general information on the law of England and Wales as at 14 October 2026 and is not advice on individual circumstances.

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