Contractors' Questions: Is my contract in the bag?

Contractor's Question: I was offered a contract last week verbally and also via email. The agency is now putting together contract paperwork and the person I am dealing with is on holiday for a week. Although there is no real rush, as the contract starts when my current one finishes in 4 weeks, should I let my current manager know now that I am not renewing? I ask because I think it will take time for him/my current client to find a replacement. Is the email confirmation I have received pertaining to the desired contract sufficient in terms of a guarantee when the agent says "take this as an official offer"?

Expert's Answer: It is often difficult to say, from a legal point of view, when a contract has been finalised, and there's a world of difference between an offer and a contract.

For a contract to be finalised, there has to either be a formal signed contract, or an offer that contains all the main terms followed by an acceptance and an intention by both parties for this to be a legally-binding agreement.

The offer and acceptance can be by email; indeed can even be made verbally, say in a phone call. So far it seems that all you have is an offer, not a contract.

Particular difficulties occur when the contract paperwork is to follow later. One way to look at it is to ask yourself this question: If, when I receive the paperwork, there are things in it I don't like, can I decide not to go ahead? If the answer is 'yes', then it indicates that you haven't yet entered into a contract. Another thing to look for is the words 'subject to contract' written in any correspondence. This too indicates that no contract has been finalised.

As to whether you should let your manager know whether you are going to renew your existing contract, this depends on the terms you have agreed with them. If you have not agreed any terms, then it seems reasonable to assume that you will not be continuing with a fixed-term contract unless you have given any indication that you intend to renew it.

The expert was Gary Cousins, solicitor and co-founder of Cousins Business Law.

Tuesday 27th Jul 2010