Save the date. Bound by unsigned draft. Oops: NDA killed. Oops: Quote incorporated into PO. Ambiguities. Crisper prose.

Suppose that:

• Alice sends Bob a draft of a contract so that Bob’s attorney can review the draft.
• Bob signs the draft, without modifying it, and returns it to Alice.
• The parties perform their obligations under the contract.
• Later, in litigation, the parties are unable to find any copy of the contract that was signed by Alice.

Under classic offer-and-acceptance doctrine, Alice might very well be bound to the terms of her contract draft anyway, even if she never did sign the contract. Consider this real-world example:

• A party to a lawsuit drafted a settlement agreement and sent it to the other party, which signed the draft as-is and returned it.
• In a later, unrelated lawsuit, the parties could not find any copy of the settlement agreement that had been signed by the drafting party itself; the parties, though, had complied with the terms of the settlement agreement.
• In the later, unrelated lawsuit, a court held that the settlement agreement was binding on the drafting party — even though the drafting party itself had not signed that agreement — and so the drafting party’s unrelated claims against the other party were barred by the sweeping release language in the settlement agreement.

See Baker Hughes Inc. v. S&S Chemical, LLC, No. 15-2413, slip op. at 9-11 (6th Cir. Sept. 2, 2016). The result might have been different if the draft contract itself had expressly stated that Alice’s offer in the draft was conditioned on both parties’ signing the document. See id., slip op. at 10.

A Sixth Circuit case illustrates the sweeping effect that might be given to a broad general-type release:

• Bruce Stevens worked for Baker Petrolite Corporation and its predecessor for approximately seven years. When his employment ended, Stevens signed a contract in which he promised to maintain the confidentiality of Baker Petrolite’s trade secrets.
• Baker Petrolite and its parent company, Baker Hughes Incorporated (collectively, Baker), sued Stevens 18 years after the contract was signed, alleging a breach of their confidentiality agreement.
• Stevens’s defense, and the outcome of this case, hinges on the validity of a broadly worded settlement agreement that was purportedly reached in the interim as a result of an unrelated lawsuit between the parties [about unpaid compensation].
• Relying on this settlement agreement, the district court entered judgment in favor of Stevens. For the reasons set forth below, we AFFIRM the judgment of the district court.

Baker Hughes Inc. v. S&S Chemical, LLC, No. 15-2413, slip op. at 2 (6th Cir. Sept. 2, 2016) (extra paragraphing and bullets added). The release language quoted by the court was the following:

Except for the obligations set forth in this Agreement, Baker hereby fully and forever remises, releases and discharges Stevens and his attorneys, agents, heirs, executors, administrators, predecessors, successors and assigns (collectively referred to as the “Stevens Release Parties”),

of and from any and all claims, demands, agreements, contracts, covenants, suits, actions, causes of action, obligations, controversies, debts, costs, expenses, damages, judgments, losses and liabilities,

of whatever kind or nature, in law, equity or otherwise,

whether known or unknown, concealed or hidden,

against any of the Stevens Released Parties which Baker has had, may have had or now has, to and including the date of this Agreement.

It is the intention of the parties to this Agreement that the foregoing general releases shall be effective as a bar to all actions, causes of action, suits, claims or demands of every kind, nature or character whatsoever, known or unknown, suspected or unsuspected, fixed or contingent, referred to above. …

Id., slip op. at 3 (paragraphing edited, emphasis added, ellipsis marks by the court).

In a California case:

• A prime contractor issued a purchase order to a subcontractor. The purchase order mentioned, but did not expressly incorporate by reference, a sales quotation that the subcontractor had previously sent to the prime contractor.
• Further down in the purchase order, though, the P.O. language referred to “the contract documents described above or otherwise incorporated herein ….” (Emphasis added.)
• Applying the contra proferentem rule of contract interpretation — and therefore construing the quoted term against the prime contractor — the court held that the “described above or otherwise incorporated” term had the effect of incorporating the subcontractor’s sales quotation by reference into the purchase order.

See Watson Bowman Acme Corp. v. RGW Construction, Inc., No. F070067, slip op. at 18, 21-22 (Cal. App. Aug. 9, 2016) (affirming, in pertinent part, judgment on jury verdict awarding damages to subcontractor).