You’ve probably heard the old saying, “a verbal contract isn’t worth the paper it’s written on.” Yet many business owners and executives still enter into handshake deals. This can create problems later on that could have been easily avoided by simply getting things in writing. There’s nothing wrong with ironing out the details of a transaction and shaking hands. But you should then follow it up with a written contract.
7 Benefits to Getting an Agreement in Writing:
- A contract determines the rights and obligations of the parties.
- Written documents are more thorough than oral agreements, since the process of signing a contract causes the parties to think through an agreement.
- Long after an agreement is made, a contract provides concrete evidence of what the parties promised, while an oral agreement relies on the parties remembering the details.
- If one party breaches a written contract, the other party is entitled to seek damages.
- A contract lays out prices, payment terms and how expenses will be reimbursed.
- If there is a dispute and the parties are not in the same geographic area, a contract details which jurisdiction applies, as well as who pays attorneys’ fees and court costs.
- Some contracts must be in writing to be legally enforceable. For example, any agreement with terms that cannot be completed in less than one year cannot generally be entered into verbally without violating the “statute of frauds.”
These are just some of the many reasons why written contracts can help protect your business in its relationships with vendors, customers, employees and others. Further protection is provided by exercising due diligence on the parties you want to enter into agreements with before signing.
When businesses ask their attorneys to review contracts, one of the duties performed is investigating the other party or entity. Businesses need to know if the other party is involved in any pending litigation and is financially healthy. They need to look into the individual or organization behind the contract.
The best protection for businesses is to enter into well-written, detailed contracts. Often, people get caught up in the excitement of making deals and just want to move forward. Take a breath and consult with your attorney and Filler & Associates first. In today’s business world, even simple agreements can become complex if there is a dispute.