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Why you don’t need a Written Contract – But it helps if you have one

People sometimes say ‘but I didn’t agree in writing’, as if this gives them a special trump card that allows them to renege on a promise.
When we talk about a contract, a lengthy document of impenetrable small print comes to mind, with any number of signatures and initials all over it.

But contract is just another word for an agreement, and to be frank, the main advantage of writing it down and getting the parties to sign it, is that it makes it a whole lot easier to prove what was agreed and by whom.


“lets shake on it…”

A word of warning though. Just because you have an agreement, written down or otherwise, doesn’t mean that you can take legal action against it. Hundreds of years of people trading and doing business has seen some basic rules (and some rather convoluted ones) evolve in the law of contract. To be legally enforceable a contract must involve something of worth exchanged for something else of worth – an agreement to give a gift is not a legally enforceable contract. Something must have been offered by one party and accepted by another, and the parties must have intended that the agreement was to be legally binding.

Where family members and close friends make agreements the Courts will presume that the parties did NOT intend it to be legally enforceable – unless something strongly suggests otherwise. You can see more about these basic elements of contract here:

So what do you do if you made an agreement – with a trader for example, but you have no formal record of what was a spoken agreement? Well first you cross your fingers and hope that the other party sticks to the deal. Indeed, if they don’t you would be well advised to use all your skills of diplomacy and charm to get them to deliver, before you start loading threats of litigation into your legal rocket launcher.

But if all else fails, then of course you should consider going legal, if someone has broken a promise. From this point forward, you proceed just as if the whole deal had been written down and signed in blood. First, you (or your lawyers) write to the other side stating clearly what the agreement was. (Don’t be surprised if they do not agree!) Then if necessary, you proceed with litigation, based on what you say the agreement was. Ultimately, if the matter gets to a court trial, both sides will present evidence to the Court and the Judge will make a decision.

Where the agreement was written, there may be plenty of argument about what the writing actually means, or how the law should be applied, but the basic words of the contract probably won’t be in doubt. But in the case of an oral agreement, the evidence is largely the statements that the parties submit to the Court – and you won’t be surprised to know that those statements usually don’t quite match! Each side gets to cross-examine the other on their story – testing their statements and trying to find cracks. The Judge’s job is to decide which party is …mistaken, and give a verdict accordingly.

So ‘I didn’t agree in writing’ doesn’t make for less of an agreement – it just makes it harder to prove what the agreement was. If you are sure of your ground and that the other party is lying – go and tell a Judge. They are pretty used to wheedling out the truth and if you can convince them that you’re right a verbal contract is as good as a written one.

Words: Rupert Lipton

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