The Verbal Agreement: It can work…until it doesn’t!

“I’m too busy to have an agreement done in writing!” “I trust him.” “They won’t agree to that term in writing!”

These are just a few, but we have heard all the reasons in the world for why people have decided to seal a deal with a good old fashion handshake or conversation. And while verbal contracts CAN be just as enforceable as written contracts, there are a number of reasons why you want to avoid them at all costs.

If you ever have a dispute, the results can be nightmarish. Just think- how will you prove a term of the agreement? How will you prove it was what the other person understood the term to be? And while it can be done in some cases, you may have to spend a considerable amount of time, money and resources to resolve an issue that could have been avoided.

Another danger with some oral contracts is that some of them are not legally enforceable at all – for example, those that cannot be performed within a year of the contract date, the sale of goods more than $500 (with some exceptions) and more. These types of agreements HAVE to be in writing.

New agreement? Make sure everyone is clear on their roles and responsibilities in WRITING before you start. Long term arrangement that’s been in place? It’s never too late to put it in writing. There are many potential issues with verbal agreements. The risk does not outweigh any perceived reward! Having a clear, well-drafted legal document- even in the simplest of arrangements- may take a little extra from you, but will be well worth it. Protect yourself and your business. Questions? Concerns? Contact C&G today!

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