When a deal is struck casually over dinner, or at a family gathering, it's easy to accept someone's word. Feeling the excitement of success will quickly fade, however, as the other person's memory of exactly what was agreed to may be different from yours. Although some verbal or “handshake” deals can be legally enforceable, nothing beats a document that clearly outlines the expectations of both parties. Whether it's on paper or not, there is still a chance that any agreement can potentially face disputes. Having it in writing adds a layer of reliability that a firm handshake could never provide.
Clarity in Expectations
Whether it's a service agreement or a bill of sale, a contract ensures that your word is bond. It's possible to sit down and verbally hash out all the details, but without a clear written record, it's hard to prove the exact terms and conditions agreed upon by both parties. This is not to say that every breach of contract is intentional, it's just a natural part of life that memory fades over time. Other times, what seems like very specific and simple terms may be completely misinterpreted by the other party. With everything written down in front of both parties, it gives them the opportunity to ask clarifying questions and make sure everyone is on the same page.
In business and in life, there are bound to be disagreements. One of the primary reasons a written contract is preferable to a verbal agreement is that the latter are harder to prove in the event of a dispute. Generally, a court will favor a written agreement because they are a clear and tangible record of the contract. Even better, a contract can have separate clauses for dispute resolution or termination. Instead of going straight to litigation during a disagreement, the contract can require that both parties reach agreements through mediation or arbitration to prevent unnecessary and costly court proceedings.
Sometimes Written Contracts Are Legally Required
If at any point, someone still prefers a verbal agreement, it's important to understand that some situations require written agreements to be legally valid and enforceable. This is known as the Statute of Frauds. Transactions or agreements that have considerable risks usually fall under this category. Here are some examples:
Real Estate Agreements: In the majority of jurisdictions, including North Carolina, any purchase, sale, or transfer of ownership of real property must be in writing to be enforceable. The mountain of paperwork you sign after buying a home isn't just to show you're the rightful owner; it also protects the seller from specific liability.
Contracts with a Long Due Date: If completing the agreement will take longer than a year, it must be in writing. Examples of this include some leases, employment contracts, and service agreements.
Contracts for the Sale of Goods Over a Certain Value: The Uniform Commercial Code (UCC) mandates that contracts for the sale of goods exceeding a specific value (typically $500) must be in writing to be enforceable.
Agreements with Non-Compete or Confidentiality Clauses: Contracts containing non-compete or confidentiality provisions are generally required to be in writing to protect the interests of both parties involved.
How to Get Things In Writing
A written and signed contract will protect both parties' legal interests and make sure that the terms are enforceable. Sometimes you know exactly what you want and the terms are simple enough that you don't need to go through the process and expense of attorney negotiations. Once you're ready to develop the contract, it's still advisable to consult an experienced attorney who can point you in the right direction and ensure your rights are protected. At NC Legal Docs, our team of skilled legal professionals can take the outline of your agreement and help you develop a contract or review an existing one. If you require assistance with your contract or other legal document needs, reach out by filling out a contact form online, or calling (704) 492-2588. NCLegalDocuments.com offers a variety of estate planning document packages that make estate planning accessible to everyone. To start your trust, Click to select your trust, or by calling 704-492-2588.