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When is a “Contract” not a Contract?

We know that in Virginia, the parties to a contract are bound to the terms of that contract. We also know that Virginia courts look to the terms of that contract to determine each party’s rights and obligations. But what is a “contract?” This blog post looks at a recent Virginia Supreme Court case that gives a little guidance to answer that question.

Facts of the case

In Hall & Wilson Construction Inc. v. Bowers, a property owner suffered damage on his property from fallen trees. He hired a contractor to remove the trees and to secure the house. The contractor gave the owner a printed form, which the owner signed. Five years later, the contractor sued for payment.

The owner argued that the parties had only an oral agreement. Oral contracts are enforceable, but the statute of limitations for an oral contract is 3 years, meaning that a party must file a lawsuit within 3 years of the date the oral contract was allegedly breached. The contractor argued that the parties had a written contract, and the statute of limitations is 5 years on a written contract.

Was it a written contract?

The Virginia Supreme Court held that the parties did NOT have a written contract. Because the parties had an oral contract, the statute of limitations had run and the case was dismissed.

The Court held that the writing provided by the contractor did not contain sufficiently clear and explicit terms to determine the parties’ respective responsibilities. For example, the writing did not set forth in sufficient detail the contractor’s obligations, nor did the writing set forth the amount of payment due from the owner or the terms of the payment. Consequently, the writing was not enforceable as a “contract.” Thus, the parties had an oral contract, and because suit was filed more than 3 years after the breach, the case was dismissed.

Even though you may have exchanged a writing with another party, you may not have a valid and enforceable contract. Having an experienced business law attorney review your proposed contract provides you with assurances that your “contract” is, in fact, a Contract.


Tarley Robinson, PLC, Attorneys and Counsellors at Law 
Williamsburg, Virginia

John Tarley

 

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John Tarley

John is the firm's managing partner and chairs the firm's small business, zoning, and litigation practice areas.

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Filed under: Business Planning, Construction litigation, General Interest, John Tarley, Real Estate Litigation, State & Federal Litigation by John Tarley

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