Teaming Agreement: Enforceable Contract or Unenforceable Agreement to Agree?

October 2015

Teaming agreements have become common and crucial contracts that seemingly bind contractors and subcontractors during the bidding process. These agreements are intended to help assure the bidding team, that all members will fulfill their reciprocal commitments should the team's bid proposal be accepted.

The problem, however, is that basic contract law often treats these agreements as unenforceable "agreements to agree"—i.e., the parties agree that if, in the future, the bid proposal is accepted, then at that time the parties will negotiate the terms regarding the work to be performed. Contractors and subcontractors are thus placed in the unenviable position of needing an agreement that is frequently worth no more than the paper it is written on. This was the case in Cyberlock Consulting, Inc. v. Info. Experts, Inc., 939 F. Supp. 2d 572, 580 (E.D. Va. 2013), which held that a teaming agreement "constitute[s] an unenforceable agreement to agree." However, Cable & Computer Tech. Inc. v. Lockheed Sanders, Inc., 214 F.3d 1030, 1035 (9th Cir. 2000) held that an oral teaming agreement could be found enforceable where there was evidence of "an exchange of promises, supported by consideration, to be a team . . . and as a team submit a bid."

The likelihood that these agreements will be found enforceable by a court can be increased by crafting them to include specific and definable terms and commitments by all parties to the agreement, relating to matters like duration, bidding obligations, and competition among team members. Indeed, that an enforceable teaming agreement can be incredibly valuable in Missouri—was shown in J.M. Neil & Associates, Inc. v. Alexander Robert William, Inc., 362 S. W. 3d 21, 25-26 (Mo. Ct. App. 2012), which affirmed jury award in a team member's favor for punitive damages when the other team member breached a teaming agreement's covenant not to compete.

Contractors and subcontractors should consult an attorney on how best to draft their teaming agreements in order to maximize the likelihood of enforceability. If a prospective teammate puts forward a teaming agreement, parties should postpone signing it until conferring with legal counsel to determine whether the agreement could later be declared legally meaningless as a mere unenforceable "agreement to agree."

Firm Highlights
Client Alert

Supreme Court Limits Ability to Compel Access to Private Property Without Compensation

More
Client Alert

DOL Publishes Cybersecurity Guidance for Benefits Plans

More
Client Alert

The New Standard Contractual Clauses: Scope, Impact, and Next Steps

More
Client Alert

The Changing Workplace Following the Latest CDC Mask Guidance

More
Diversity & Inclusion

Law Firm ILN-telligence Podcast Hosts Ronald A. Norwood to Discuss Mentorship, Diversity & Inclusion in the Legal Industry, and the Importance of Equity for All

More
News

Michael D. Mulligan, Mysun Charitable Foundation Recognized at Greensfelder Park Ribbon Cutting Ceremony

More
News

A Lawyer’s Guide to the Galaxy Podcast Named Among Best Copyright Law Podcasts for 2021 by Welp Magazine

More
Client Alert

Missouri Supreme Court Holds that Public Governmental Bodies May Not Charge for Attorney Review Time

More
Client Alert

Colorado Joins the Bandwagon, Enacts Comprehensive Privacy Law

More
News

Lewis Rice Welcomes 2021 Summer Associates

More
News

Claims Filed for Compensation in North Carolina Ecusta Trail Rail-to-Trail Case

More
News

Jeannine Moentmann Becomes President of St. Louis Paralegal Association for 2021-2022

More
Client Alert

First-Issued Interim Final Rule Gives Guidance on No Surprises Act

More
Client Alert

FTC Adds Teeth to the ‘Made in USA’ Rule

More
News

Jeremy P. Brummond Presents at Webinar for Experienced Construction Attorneys

More
Client Alert

CROWN Act Legislation on the Verge of Passage in St. Louis City & County

More
Client Alert

EEOC Issues Updated Guidance on COVID Vaccination Policies

More
Client Alert

Missouri Supreme Court Reverses Overtime Wages Judgment Resulting from Employer-Mandated Screenings Under the Portal-to-Portal Act

More
Diversity & Inclusion

Lewis Rice Launches “Next Level” Diversity and Inclusion Programs

More
Client Alert

Supreme Court Hands Down Unanimous Decision Limiting FTC’s Ability to Seek Monetary Relief

More