San Diego Business Contracts: Are “Orphan” Signature Pages Okay to Use?
In general, here in California, it is “okay” to use so-called “orphan” signature pages for business contracts as long as the parties have in fact agreed to the contract and all of its essential terms. An orphan signature page refers to a separate final page of a contract, where various signature lines are located, which is circulated for original signatures without the whole contract being attached. This one page is signed by the relevant parties and is eventually reunited with the remainder of the whole contract. Often, at that point, full copies of the contract are made, and complete copies sent to all the parties. It is crucial to check the completed contract if you or your business have signed a contract via orphan pages. It is possible that some inadvertent change was made to the contract to which your business did not agree. By checking the whole contract, you can verify that all of the terms of the contract are accurate. An experienced San Diego corporate attorney can help in this regard. You and your company cannot be bound by the terms of a contract to which you did not agree (even if you signed an orphan signature page). However, if there are mistaken or inaccurate terms in the contract, you must object and reject the incorrect terms. Otherwise, there is a danger that your silence — and performance of the contract — can be deemed to a form of agreement.
Under California law, consent of the parties to a contract must be communicated. Whether there is consent, or agreement, is based on many factors, not just on one factor like whether a party has signed the contract. California courts consider all the circumstances surrounding the contract formation and evaluate any and all evidence that might show “… the outward manifestations or expressions of the parties” of their agreement. See Cal. Civ. Code, § 1565, subd. 3.) Mutual assent is determined under an objective standard. This is why, with respect to orphan signature pages, such are deemed a valid form of assent under most circumstances. Along with other indications, orphan signature pages are “outward manifestations” of agreement. For example, in the case of Juen v. Alain Pinel Realtors, Inc., 32 Cal. App. 5th 972 (Cal. App. 6th Dist. 2019), certain paragraphs in a real estate brokerage agreement were not initialed by the home owner. That alone was not sufficient for the courts to hold that the parties had not agreed to those provisions. The court looked at the totality of the circumstances included custom and habit to see if there were any other facts that demonstrated “manifestations” of consent. Finding none, the court refused to enforce the provisions.
With respect to orphan signature pages, a similar result was recently found in a Delaware case. See Kotler v. Shipman Associates, LLC, Case No. 2017-0457 (Del. Chan. August 21, 2019). In that case, the parties signed a stock warrant agreement via orphan signature pages. However, several versions of the contract existed — a September 12th version, a September 17th version and a September 25th version. The key disputed provision was a non-compete provision stating that, if the relevant party voluntarily left the company and began competing against the company within 18 months, the stock warrant would be forfeited. The different drafts/versions of the contract contained different versions of the non-compete/forfeiture. When the lawsuit was filed in 2013, the parties disputed which version of the contract had been “signed” via the orphan signature pages. One party thought a September 17, 2007, version was the “correct” contract, while the other party asserted a September 25th draft was the “correct” version. No copy of the “fully executed” contract had been circulated to the parties. In the end, the Delaware court refused to enforce the disputed provisions in the two versions of the contract holding that there was not enough evidence showing that the parties had come to an agreement on the non-compete/forfeiture issues. Indeed, the court held the entire agreement to be unenforceable. As the court stated, there was “… credible and convincing evidence that these parties were not operating from the same page, or more precisely the same agreement, as they negotiated its material terms.” As such, there was no “meeting of the minds” and, therefore, no enforceable contract.
Contact San Diego Corporate Law
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.