The most dangerous contractual assumption in a fast-moving project is that nothing is binding until the formal contract is signed.
Project teams frequently work under time pressure. Mobilisation needs to begin. Suppliers need access. Engineers need information. Purchase orders need releasing. Executives want momentum.
In that environment, one belief can become particularly expensive:
“We have not signed the contract yet, so we are not committed.”
The supplied Week 2 material expressly recognises that contracts can be formed in writing, orally or through conduct. It also describes offer, acceptance, consideration, intention, capacity and related requirements as part of contract formation.
The strategic implication is not that every conversation creates a contract. It is that contractual exposure can emerge before the document everyone calls “the contract” is executed.
This is strategic commentary and not legal advice.
The Strategic Context
The source material defines a contract as an agreement enforceable at law. It explains that agreements may be written, verbal or implied through behaviour.
The material also uses conduct as an example of acceptance. In the cited Empirnall Holdings v Machon Paull teaching example, the parties' conduct was relevant even though the written terms were not signed.
For project leaders, this creates a governance challenge.
Operational activity can move faster than documentation.
A supplier may start work. The client may make progress payments. The team may follow the commercial terms in a draft. Each event can become evidence of how the relationship was understood.
What Leaders Commonly Misread
“Unsigned means non-binding”
The source material does not support that conclusion.
A signature is strong evidence of agreement, but it is not the only possible mechanism by which agreement can arise.
“The legal team will fix it later”
Legal advisers can clarify and document the position, but they cannot erase all consequences of earlier conduct.
Once work has started, money has changed hands or expectations have been created, the bargaining environment is different.
“We can begin now and negotiate the difficult terms afterwards”
That can transfer negotiating power.
Once a supplier is mobilised and the project depends on continuity, the organisation may have less leverage to resolve unresolved liability, scope or pricing issues.
“Operational emails are harmless”
Messages written by project personnel may become relevant evidence of what was offered, accepted, directed or understood.
The same applies to meeting minutes, purchase orders, notices to proceed and payment behaviour.
Reframing the Issue
The real issue is not signature.
It is commitment control.
Leaders need to know:
- who can make commitments;
- what event creates operational commencement;
- what terms apply before full execution;
- which matters remain explicitly unresolved;
- whether temporary arrangements are documented;
- how conduct will be controlled while negotiation continues.
A well-governed project can move early without pretending uncertainty does not exist. It can use clearly defined interim arrangements and explicit authority.
A poorly governed project simply starts and hopes the contract catches up.
Strategic Analysis: The Cost of Accidental Commitment
Loss of negotiating leverage
Before mobilisation, both parties usually retain more alternatives.
After mobilisation, switching suppliers may create delay and cost. The supplier may also have committed resources.
The project is now negotiating inside a dependency rather than from a clean starting position.
Unclear terms
If work starts under incomplete documentation, later disagreement may arise over:
- price;
- scope;
- payment;
- risk allocation;
- intellectual property;
- insurance;
- delay;
- termination;
- warranties.
The parties may agree that work was authorised while disagreeing about the terms governing it.
Authority problems
A project manager may have operational authority but not contractual authority.
A supplier may reasonably interpret instructions differently from the organisation's internal delegation framework.
Internal authority should therefore be aligned with external communication.
Evidence problems
Where parties act before formal execution, records become more important.
The organisation should be able to show:
- what was approved;
- by whom;
- under which interim terms;
- for what period;
- with what limits.
Decision Framework
Before allowing work to commence without a fully executed contract, ask:
1. Is there a compelling business reason?
Schedule pressure alone should not automatically override commercial discipline.
2. What is the interim legal/commercial basis?
Is there a letter of intent, early works agreement, purchase order or another controlled mechanism?
FACT CHECK REQUIRED: the legal effect of any interim instrument must be reviewed for the actual jurisdiction and circumstances.
3. What work is authorised?
The interim scope should be deliberately bounded.
4. What financial exposure is authorised?
Set limits.
5. What terms apply?
Do not assume everybody shares the same understanding.
6. What remains unresolved?
Record it.
7. Who can extend or change the interim arrangement?
Prevent informal expansion.
This converts early commencement from an uncontrolled exception into a governed decision.
From Strategy to Execution
Immediate action
Review current projects for work occurring before full contract execution.
Prioritise packages where:
- values are high;
- scope is evolving;
- supplier dependency is growing;
- important risk clauses remain unresolved.
Medium-term capability building
Create a pre-contract commencement protocol.
It should define:
- authority;
- approved instruments;
- legal review triggers;
- financial caps;
- required records;
- expiry dates;
- conversion to full contract.
Long-term strategic positioning
Track how often the organisation starts work before contracts are executed.
If this is routine, the issue may not be legal discipline. It may be upstream planning failure.
Late procurement, weak requirements, unrealistic schedules and delayed approvals can repeatedly force project teams into early commencement.
The solution is therefore partly commercial and partly portfolio governance.
Related article: When an Offer Is Not an Offer: The Hidden Boundary Between Marketing, Negotiation and Commitment
Related article: Acceptance in the Digital Workplace: Email, Conduct, Silence and the Postal Rule
Signals to Monitor
- suppliers mobilising before execution;
- recurring “sign later” behaviour;
- payment under draft terms;
- unapproved letters of intent;
- emails authorising work with no commercial reference;
- unresolved liability terms after commencement;
- disputes over which version of conditions applies;
- project managers believing signature is the only commitment point.
Questions for the Leadership Team
- How many current suppliers are working before full contract execution?
- Who can authorise that exception?
- What limits apply during the interim period?
- Could any project team member unintentionally communicate acceptance?
- Which recurring planning failures create pressure to start before contracting is complete?
- Are our records strong enough to reconstruct what was authorised if the relationship fails?
Closing Perspective
A signature is an important control, but it should never become a false sense of security.
The more useful question for leaders is:
“What actions, communications or conduct could make our organisation look committed before the document is signed?”
Once that question is asked, contract formation becomes part of project governance rather than a legal surprise discovered after the work has begun.
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