What Contracts Are Required To Be In Writing?
Most contracts can be either written or oral and still be legally enforceable. However, some agreements must be in writing to constitute a binding agreement. Oral contracts are difficult to enforce. They don't include a clear record of the legal requirements of an enforceable contract. These legal requirements include offer, consideration, and acceptance.
It's important for business owners to understand which kinds of contracts and business transactions must be written to be valid.
Contracts Required to be in Writing: At a Glance
Generally, the following types of contracts must be in writing to be enforceable. Verbal contracts in any of these categories are not automatically considered void, but they may be voidable and could be affirmed or rejected by either party at any time. Some examples of contracts required to be in writing include:
- Real estate sales
- Agreements to pay someone else's debts
- Contracts that take longer than one year to complete
- Real estate leases for longer than one year
- Contracts for over a certain amount of money (depending on the state)
- Contracts that will last longer than the life of the party performing the contract
- A transfer of personal property at the death of the party performing the contract
- English Law and the Statute of Frauds
An English law from 1677, the Statute of Frauds provides the basis for today's written contract requirements. Written contract rules aim to avoid fraud by requiring written proof of the agreement. This legal goal also makes sense as a practical matter because disputes over verbal agreements typically lack an objective record of the contract terms.
State laws generally dictate the enforcement of contracts. However, most states have adopted the Uniform Commercial Code (UCC). The UCC includes the Statute of Frauds. For example, the California statute conforming to the UCC explicitly states that contracts for the sale of goods costing more than $500 are not enforceable "unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his or her authorized agent or broker."
Why It's Always Best To Get It in Writing
Although some types of contracts may be valid oral agreements, it is advisable to "get it in writing" to ensure both parties understand their obligations. In a lawsuit involving an oral agreement, the person bringing the lawsuit must first prove that a legally binding contract exists, including the terms of the agreement. If court enforcement is required, a written contract shows the terms of the contract and avoids a "he said, she said" dispute.
A contract may seem straightforward. There is an offer, acceptance, and perhaps even a counteroffer in the mix. However, achieving a true meeting of the minds can be complicated, making written legal documents a safer option.
It's easier to check with an attorney to see whether a contract is valid rather than enforcing a poorly drafted agreement after problems arise. While breach of contract lawsuits can be costly to your small business, so can unenforceable agreements you thought were valid under contract law.
Drafting Business Contracts? Protect Your Interests by Calling an Attorney
A valid contract may be as simple as an offer, an acceptance, and a handshake. However, written agreements are always easier to defend should legal issues arise. A simple contractual mistake or oversight can cost you money or worse. A contracts attorney is familiar with business law and can provide valuable legal advice. Protect your business by contacting a local contracts attorney today.
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