Yes of course you can reply to an Advocate's notice. But note that it can be used as evidence .
As for unsigned contracts :
1) In Law even Oral Contracts are valid. Evidences have to be lead by both parties in their support. Of course a much heavier burden lies on the party alleging such a contract.
2) These evidences can be payments, receipts, discussions, e-mails, verbal statements, witnesses deposition proved etc..
See for eg ; Brij Mohan And Ors vs Smt. Sugra Begum And Ors on 19 July, 1990 Where held :
1) There is no requirement of law that an agreement or contract of sale of immovable property should only be in writing. However, in a case where the plaintiffs come forward to seek a decree for specific performance of con- tract of sale of immovable property on the basis of an oral agreement along, heavy burden lies on the plaintiffs to prove that there was consensus ad-idem between the parties for a concluded oral agreement for sale of immovable proper- ty. Whether there was such a concluded oral contract or not would be a question of fact to be determined in the facts and circumstances of each individual case.
So, for eg. if you got a document which you did not sign but work proceeded anyway with you not stopping it or clarifying it, it is a question then of evidences on both sides on what is being claimed now.
DISCLAIMER : General information and advice provided is without any warranties as to suitability for any use, correctness and application to any specific case. Please always take proper legal counsel . However, if it helped anyone even a little a " thanks" would be appreciated and would encourage me to keep on making efforts :-) . I am also always open to corrections and further learnings from more experienced Seniors here.