How often have you started working on a project without a signed contract? My experience has been that subcontractors do it all the time. But, what does it mean?

A recent case out of Montana sheds some light on this issue. In this case, the subcontractor submitted its bid to the general contractor. The GC signed the bid on the acceptance line, but wrote in “pending contract with the owner.”

After the subcontractor had been working on the project for two weeks, the general delivered a subcontract that included work well beyond what the subcontractor had agreed to perform, with no compensation increase. The subcontractor submitted a new bid to do the additional work, over twice its original bid, and expressly refused to perform the additional work contained in the subcontract. In turn, the general refused to pay the sub for the work it already performed.

The general and subcontractor ended up in court. The court reviewed the situation and held that a “meeting of the minds” occurred when the sub started to work and the general allowed the sub to do the work. The court ordered the general to pay the subcontractor for the work performed.

Ultimately this dispute probably took more time and cost more money than the work performed. And, this case underscores the importance of getting all contract documents in order and signed before the work begins.