Unsigned Purchase Order Deemed Written Contract under AI Endorsement

Originally published by Kevin Merriman.

The written contract requirement in an additional insured endorsement does not require that the contract be signed unless the endorsement so provides, holds New York’s Appellate Division, First Department in Zurich American Insurance Company v. Endurance American Specialty Insurance Company.

The endorsement provided that additional insureds included “[a]ny entity required by written contract … to be named as an insured.” The purchase order, which required the contractor to obtain additional insured coverage for the owner and its property manager, contained no signature lines and was unsigned, but stated: “THIS PURCHASE ORDER AND AGREEMENT IS A LEGAL AGREEMENT BETWEEN [owner and vendor]. BY ACCEPTING THE ORDER, VENDOR HEREBY AGREES TO BECOME BOUND BY THE TERMS OF THIS AGREEMENT.” The purchase order was accepted by performance of the work.

The insurer argued that the parties were not additional insureds, because the unsigned purchase order was not a written contract. The court disagreed, finding that the endorsement required only a “written” contract, not a “signed” one (in contrast with endorsements that also require that the contract be executed), and that, by its terms, the purchase order became binding upon its acceptance, not upon signing the document.

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