How much does it really matter in these situations whether or not you have a "signed contract"? My understanding is that any agreement to do work for compensation is a contract, and these days even a "signed" contract is likely to just be a PDF which is as easily faked as an emailed "$65/hr? Sounds good, go ahead and get started."
Is it just one of those things where someone's less likely to try to rip you off if they put their signature on something? Or is it more to make sure you get the words in front of a couple of lawyers who are much less likely to lie than the involved parties?
It matters a LOT. A you-said they-said dispute over a verbal contract can be expensive to resolve --- almost certainly way more expensive than the total value of this dev contract.
Startups who hire outside vendors should be very careful to foreclose on any potential verbal contract --- "do not start working for us until we have a signed master agreement and a statement of work" --- and that's for a lot of reasons, not just misunderstandings like this.
Obviously, if a company operator deliberately leads a vendor to believe there's an authorization to start work, they're morally on the hook for billed hours. But in reality, consultants go into engagements like that knowing that they're on the hook if anything goes wrong. This comes up a lot in consulting, because legal negotiation over master agreements can take weeks and sometimes threaten to ice deals that can be kept alive by just starting ahead of the contract.
But it's not a verbal contract if it's over email, right? It's right there in writing, we both have copies of it, it can (theoretically) be verified by a third party.
If I go to small claims with a copy of an email, what can they say that they couldn't say just as well if I go in with a piece of paper I claim they signed?
I've never seen someone say "Don't start working without a notarized contract", but that's the hidden message, right? Otherwise we're just playing at semantics.
Edit: As above, I notice now the OP did have a purely verbal contract. I was referring to emailed agreement which is common in our line of work, though.
It is worth noting that there are reasons beyond enforceability for having written contracts - making sure both parties are on the same page about important elements of the contract such as scope of work, deliverables, acceptance criteria, and payment terms.
I'm not implying that this is what happened here, but it isn't at all uncommon for two parties to verbally negotiate something like this in good faith and come away with different understandings of subtle, but important, elements.
Writing it down doesn't prevent this entirely, but it goes a long way to clearing up possible misunderstandings.
Certainly, nobody deserves to go unpaid for their work, but anyone starting work without a clear written understanding of the facts is setting themselves up for all sorts of problems.
Here's one reason why putting it in writing is best, even if forgery is possible.
People are way more likely to argue about what was agreed to, than about whether an agreement was made.
With verbal agreements, most people won't lie and say that no conversation took place. (The "whether" part.) But many people will misremember or distort the exact words that were exchanged. (The "what" part.) And those exact words are what count, legally.
Likewise, a person would have to be really slimy to claim that your signed, written contract is a forgery. Most people won't dispute that they signed it. (Again, the "whether" part.) And since it's in writing, and there simply is no room for disputing the "what."
To put it another way, getting a written agreement raises the moral and legal stakes for a potential welcher. They'd have to accuse you of forgery, instead of just shrugging and saying "I guess we remember the conversation differently."
I'm realizing now I misread the OP, and we are talking about a verbal contract-- for which I'll agree different rules apply. (Not legally, but practically.)
My question is more about whether there's any practical distinction between an informal email which contains a clear agreement to work and the "signed contract" spoken of in legend.
Practically, one difference would be in the level of detail. Contracts tend to go on at length about the finer points of the business relationship. Whereas, in an email, people would typically be much more brief.
The extra details can be very important.
For one, they help prevent misunderstandings. ("It's been three months, and you haven't paid me." "Oh, well it's our standard practice to pay all invoices within 12 months.")
Secondly, if the relationship becomes acrimonious, the details help limit the scope of a possible dispute. The more the parties make explicit up front, the less there is to argue about later.
Another difference concerns the Statute of Frauds. (http://www.lexisnexis.com/lawschool/study/outlines/html/cont...) Certain kinds of contracts--notably those above $500--require a signature of some kind. But, if you read § 6.03 in the statute, you'll see that this can be construed broadly. Often, merely including your name in an email is enough to satisfy the Statute of Frauds (http://www.internetlibrary.com/topics/statute_frauds.cfm). But if you're looking to hold someone to their word, it's safer not to rely on that.
It's better to be safe than sorry. If you want something to be binding, it's best to go with a solid contract, rather than just an exchange of emails. If you don't want to commit yourself just yet, don't assume that your emails are nonbonding. In other words, be pessimistic either way.
Is it just one of those things where someone's less likely to try to rip you off if they put their signature on something? Or is it more to make sure you get the words in front of a couple of lawyers who are much less likely to lie than the involved parties?