Owner Didn't Sign Contract but Still Owes Contractor Over $337,800

Two owners hired a contractor to do work on their property. The contractor gave the owners personal guaranties and a written contract for the work to be done. Each owner signed a personal guaranty, but never signed the contract. The contractor started work. When the owners didn't pay him, the contractor stopped work and sued them personally for violating the contract. The owners argued that the personal guaranties only covered their contractual obligations to the contractor, but since they'd never signed a contract, they couldn't be liable under the guaranties.

A Georgia appeals court ruled that a contract existed despite the lack of a signed agreement and ordered the owners to pay the contractor $337,800 plus interest. The court said that a signature isn't required to form a contract if the parties agree on all the material—that is, important—terms set out in a written agreement. Here the owners and contractor agreed on all the material terms set out in the unsigned written contract, including price, time, and the form of the contract. And the owners authorized the contractor to start work and approved the budget, the court added. As a result, a valid contract existed [Marett v. Brice Building Co.].