Continuing our series on the 10 Commandments of Loss Prevention for Design Professionals, this article will address the importance of making sure a written agreement is not only signed, but covers all the necessary bases. 

In a previous blog, we talked about identifying the right clients and the right projects. 

The next logical step is to draw the boundaries around the project. Below are the three legal elements that secure a signed document as well as additional considerations to make certain a contract is binding.

3 Elements of Legally Binding Contracts

These elements are necessary for a contract to be considered legally binding: 

  • Offer. The contract must outline the services to be performed.
  • Consideration. The amount of payment that will be exchanged for services performed must be included.
  • Acceptance. A section where the parties mutually accept the terms and conditions of the contract must be included and signed by people with the authority to do so.

Electronic Communication Considerations for Contracts

Given how much communication is done electronically now, it is important to address questions specific to electronic contracts. The two most common questions involve e-signatures and authority.

Electronic Signatures

Electronic signatures are considered legally binding according to the Treaty of Electronic Commerce and Communications enacted toward the end of the Clinton administration. In other words, e-signatures are just as valid as those signed in ink. 

This is true for contracts as well as anything else you send in connection with a project that can be construed as a change order.


With much of a project’s communication taking place over email, confusion around authority has become more common. 

So what happens if you get contract approval or a change order from someone who doesn’t have legal authority in the contract?

This is a tricky situation. That person would need to have the authority to make those decisions. Always double check that the person signing or expressing authority actually has that authority. Clarify it in the contract, and while you’re at it, clarify who has the authority to change the contract.

For situations where it’s too late to make authority changes in the contract, you can look into ostensible authority or ostensible agency. However, it’s always better to be proactive and avoid those situations altogether.

Additional Contract Considerations for Design Professionals

Under the Business & Professions Code, structural engineers have the following additional considerations:

  • License Requirement. All client service agreements must include the design professional’s license number
  • Additional Services & Termination. In order to be valid, contracts must outline additional services and termination

About Black Swan

Black Swan Risk Management was founded to keep Architects and Engineers up-to-date on Professional Liability Insurance in a Design World that is constantly changing.

Black Swan is your resource for industry-specific information on contract review and negotiation. Find templates, go/no-go checklists, certification resources, educational materials, consultative services, and more.

At Black Swan, our clients find actionable insurance solutions for complex design projects. We use flexible techniques and best-in-class communication, so that clients can fully understand their insurance and feel well taken care of. For you this means less stress and lower premiums.

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