Lawyers can be annoying. We get that. However, one of the most important pieces of advice I can give to clients is to always put their oral agreements in writing. Although oral agreements can be valid and legally enforceable in many cases, having a written agreement in place that signed by both parties provides clarity, certainty and protection for all parties involved.
Here are some reasons why you should put oral or handshake arrangements in writing:
- Clarity and Certainty: Oral agreements can often lead to misunderstandings, as both parties may have different recollections of what was said or agreed upon. Having a written agreement provides clarity and certainty, as all terms and conditions are clearly outlined and documented.
- Protection: A written agreement can also provide protection for all parties involved. Not all parties are scrupulous and turnover of employees can mean that an arrangement with one person in a business may not be honoured by their successor. In the event of a dispute or disagreement, a written agreement can serve as evidence of the terms and conditions that were agreed upon, and must be honoured.
- Legal Enforceability: In many cases, oral agreements can be legally enforceable. However, proving the existence and terms of an oral agreement in court can be difficult and time-consuming. You will need the persons involved in the deal to give evidence of their recollections and what they intended. You will also need to gather in any emails or correspondence between the parties in an attempt to evidence any changes or how the deal was being interpreted and actioned by the parties. This is a pain. It’s time consuming and expensive. A written agreement can provide strong evidence of the agreement’s existence and terms, making it easier to enforce in court. It also preserves corporate memory.
- Completeness: A written agreement can ensure that all important terms and conditions are included in the agreement. In many cases, oral agreements may only cover certain aspects of an agreement, leaving other important terms and conditions open to interpretation or negotiation. A written agreement can ensure that all important terms and conditions are included, providing a complete picture of the agreement.
- Formality: Finally, putting an oral agreement in writing adds a level of formality to the agreement. This can be particularly important in business or commercial transactions, where formal agreements are often the norm. A written agreement demonstrates to all parties involved that the agreement is serious and binding.
In conclusion, putting oral agreements in writing is a smart and advisable practice for all parties involved. Written agreements provide clarity, certainty, protection, legal enforceability, completeness and formality. By putting oral agreements in writing, clients can ensure that their agreements are legally sound and fully documented, protecting their interests and avoiding potential disputes. If you need assistance in reflecting an oral agreement in writing, give our business lawyers a call. They love this stuff!