The Importance of Written Contracts

26 Mar

If you go to court over an agreement dispute, a question you’re likely to hear is, “Did you get it in writing?” It’s not something that crosses everyone’s mind, especially if you’re making a deal with someone you trust, but things change. Perhaps something went wrong in your business, your relationship turned sour, or conditions changed. Taking that to court, however, gets tricky, because without a signed and written agreement, you have no proof for the terms of your contract. 

A judge needs more to work off of than a he-said-she-said situation, because the human brain, while intricate, isn’t infallible. Memories can fade over time, or not be passed over if a new party gets involved, or someone could choose to lie about the situation, and with no proof, the judge could assume the other party’s word has just as much validity as your own. When entering a contractual relationship with someone else, keep this in mind while setting up your document:

Be Detailed

This is critical. A detailed contract stating what’s expected of both parties leaves little room for interpretation or loopholes the other person can take advantage of. Performance, payment terms, termination rights, and rights upon default (to name a few) should be clearly stated in your documentation. Negotiating a detailed contract will often bring up any problems that a verbal agreement might miss before energy and resources are poured into the project. Hashing out these disagreements will prove whether or not there’s a deal to be made at all.

Contracts Must Be in Writing to Be Enforced

As mentioned above, without a written contract, it’s difficult to enforce anything at all. Some contracts must be written down, however, such as real estate leases for over a year, the sale of real property, or the agreement to pay a debt of another. Having a contract written down will give you the legal advantage of enforcing what the both of you agreed to upon signing, but likewise, that very thing can be thrown back at you, so be sure to follow your contract exactly. Simply writing down the agreement isn’t enough, let alone enforceable, so going to an experienced attorney to assist in writing up the contract is your best course of action.

The benefits of having a written contract far outweighs the quickness that verbal agreements can have. To save your business time, resources, and money, have a contract written before making your next deal—it could very well save you down the line. 

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