“Your Contract Was Never Final”: When Drafts, Term Sheets, and Emails Create Legal Risk

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

Most business deals don’t start with a final, signed contract. They begin with a flurry of emails, a draft term sheet, and negotiations that later become the basis for a binding relationship.

But what happens when you believe a deal has fallen through, only to discover that the documents exchanged have locked you into obligations you never intended to accept?

The Illusion of “No Contract”

Many business owners assume that without a final signature, nothing is legally binding. Unfortunately, this isn’t always the case.

Courts in New York and New Jersey can look at:

• Email correspondence that shows consistent negotiations and acceptance of key terms
• Draft agreements that indicate mutual intent to be bound—even if not finalized
• Term sheets that, when combined with conduct, establish a practical contract

Where the Risk Lies

Even if you walked away from negotiations, your actions (or inactions) may have given the other party the grounds to claim a legal relationship. Key issues include:

• Reliance: Did you proceed on the basis that the deal was closed?
• Performance: Were some services or payments exchanged under the assumption of a binding agreement?
• Consistency: Do drafts and emails consistently reflect that both parties intended to be bound?

Why Business Owners Should Revisit Their “No Contract” Assumptions

It’s easy to think, “No signature, no contract.” In reality, the law often finds otherwise when:

• The parties act as if there was an agreement
• There are clear records of negotiations and promises
• Partial performance or payments have already taken place

This uncertainty can leave your business exposed to unexpected liabilities or disputes later on.

What Should You Do?

If you’re not sure whether your pre-contractual communications bind you, it’s time to:

• Conduct a comprehensive document audit of emails, term sheets, and draft agreements
• Assess your conduct during negotiations and how it might be interpreted
• Consult with legal counsel to understand your position before a dispute arises

Act Now to Protect Your Business

Don’t leave your rights to assumption. Even if a deal wasn’t finalized, the trail of correspondence can create obligations that are enforceable in court.

📞 Protect your interests—schedule a contract strategy session with JDE Law Firm, PLLC now:
www.jdelaw.nyc | NY: 718-966-0877 | NJ: 732-490-7120

My business is to protect your business.