Q: “Where’s the written contract?”
A: “Oh . . . we were operating on a handshake agreement.”
– or –
Q: “Where is that in the contract?”
A: “It isn’t in there, but they promised it.”
More often than not, people come through our door seeking assistance on a contract dispute that, in all actuality, should never have been one. Relationships break down. A third party gets involved. Business dealings go belly up. Now you’re in my office, and my first questions are “where’s the written contract?” or “where does it say that in the contract?”
Yes, oral contracts are enforceable and they may have worked for years – but, it takes only one sour deal for that old faithful handshake agreement to turn into the bane of your business. Conflicts cause interruptions. Lawyers get involved. Litigation is expensive, win or lose. At that point it’s every man for himself. Your word vs. theirs. People lie. Stuff happens.
The difficulty in backing up your handshake agreements (or your loosely drafted written contracts) is the ability to enforce them. Convincing a court that certain terms were included is a difficult task, especially when the other side vehemently denies it. This same premise follows when dealing with a very basic written contract (“Y purchased widget from Z for $20”). Without placing your intentions in writing, everything is left open for interpretation – assuming the court will even allow outside evidence in.
Placing your agreement – and all necessary terms – into a detailed written contract using precise language should safeguard your position. If a disagreement arises, your agreement provides the terms and conditions to help navigate the dispute and aid in getting things back on track. Clearly defined contracts should also leave little room for interpretation. That training they failed to provide, which you vaguely mentioned in your contract? The term they verbally promised before you signed the dotted line? That final purchase price they swore they’d pay before shaking your hand? All of these issues could all be resolved with the drafting and negotiating of a written contract.
Early retention of counsel to aid in your contractual dealings may appear an unnecessary expense, but that expense can get much, much greater when retained later to handle a dispute that could have been mitigated.
In the end, stuff happens … so make sure you put it in writing.