“The Deal Fell Apart — But Can They Still Sue?” What Happens When Contract Negotiations Break Down

By Jesse David Eisenberg, Esq. | JDE Law Firm, PLLC

You spent weeks negotiating a deal. Maybe even months.

Emails were exchanged. Term sheets were signed. A draft agreement was circulated — but never finalized.

Then the deal collapsed.

Now you’re getting a demand letter. Or worse — a summons. Can they sue you if no contract was ever signed?

Yes — Sometimes They Can

Contrary to popular belief, a lawsuit doesn’t require a fully executed contract.

Under New York and New Jersey law, parties can still bring claims based on:

• Promissory estoppel — if you made a clear promise and they reasonably relied on it
• Quantum meruit — if they provided services expecting payment and you accepted the benefit
• Bad faith negotiation — in rare cases involving letters of intent or exclusivity agreements

But They’re on Thin Ice Without a Signed Deal

Courts are cautious. If your correspondence clearly shows that no contract was final until signed, you may be protected.

The key is in the documents. Emails, drafts, and behavior will all be examined to determine if there was mutual intent to be bound — even informally.

What You Should Do Now

• Preserve all communications: Emails, texts, draft contracts, and term sheets
• Stop informal contact: Anything you say now could be used as an admission
• Have your counsel evaluate the exposure: Not every threat holds weight — but some do

Whether you’re being accused of walking away or you’re considering suing the other side, strategy at this stage is everything.

This Isn’t Just About Contracts. It’s About Leverage.

Even without a formal agreement, businesses can be dragged into litigation over expectations, reliance, or partial performance.

📞 If you're dealing with a deal that fell apart, let's protect your position now — before it turns into a courtroom battle:
www.jdelaw.nyc | NY: 718-966-0877 | NJ: 732-490-7120

My business is to protect your business.