One of the most common causes of legal disputes is the failure to get an agreement, however small, in writing. Today, on the Cornerstone Law Blog, we want to tackle why it is so important to put your thoughts in writing when you and a friend or business associate are agreeing to a contract.
To begin with, it’s important to note that agreements are typically binding even if they are not in writing. Contrary to popular belief, most oral agreements are legally enforceable—if you can prove them (although there are exceptions, such as when dealing with land, with contracts for goods over a certain price, and in certain industries such as home improvement).
So why is it important to get your agreement in writing if it can be enforced even without a written document?
Why get it in writing?
- The most important reason is it is hard to prove what an oral agreement was for.
Unscrupulous parties can lie about what was agreed to, and even when everyone is being honest, people’s memories tend to fade surprisingly quickly. Relying on someone else’s memory to agree with your own is a recipe for disaster in enforcing your contracts.
- Misunderstandings are harder to smoke out and deal with when a contract is not written down.
It may sound funny, but there have been many lawsuits litigated over something as simple as the meaning of “here.” If someone agreed to bring a product “here,” where is “here?” If the agreement was made over the phone, one person may have assumed that “here” meant someone’s home, when in fact they meant their business some many miles away. Sometimes this type of disagreement can be cleared up easily, but in other cases it can be a mistake that can cost substantial sums of money.
The point is this: without putting something in writing and taking the time to clarify simple points of misunderstanding, you can end up in a contract dispute that neither party brought about by their malice or ill will.
- It helps you to think about things that you weren’t really considering when you first made the contract.
If two people get together and agree orally to a “handshake deal,” they may not be thinking about questions such as, “What happens if a pandemic shuts down the world and one side can’t deliver the product because the government won’t allow it?”
And what happens if there is a good-faith dispute over the contract? Do the two of you first have to go and deal with it in front of a board of arbiters, or do you go straight to court? And which court? Where can you be sued? What do you do if a labor shortage or a war in another country suddenly makes it impossible to get the raw materials necessary to produce the product you’ve ordered?
There are hundreds of potential questions that a good transactional lawyer can help you to work your way through. Even without the involvement of a lawyer, there are things you may think of as you put the agreement in writing that will help you to confront potential misunderstandings and disagreements that will cause problems down the road.
How can you put it in writing without being overly difficult?
Sometimes business owners in particular are concerned that continually putting contracts in front of their clients or customers will cause them concern and will scare them off of working with them further. In most cases, this concern is not well-founded.
Most customers understand and even appreciate the time that you will take to put things in writing. But if they don’t or if you are concerned that the time necessary to reach a written agreement will make it difficult for you to continually get new contracts drafted, one approach is simply to put everything into an email or even a text message.
Once again, putting everything in writing will help you to confront disagreements that may arise between you and the other party. In most cases, it is best practice is to say, “Are you in agreement with all of these things?” at the end of the email (or something to that effect). Getting them to respond back will in many cases create a binding written contract between you two.
Note: this article is not meant as legal advice.
There are specialized areas of law where a simple email or text message is not sufficient. It’s important that you talk to a lawyer about your specific concerns. But in the meantime, we hope that the tips in this article will help you in your day to day business and personal affairs to ensure that your contractual agreements are being memorialized in writing.
For help in drafting or reviewing contracts, contact Cornerstone Law Firm today.