Oral Contracts and Verbal Agreements

During a mediation I recently attended where there were invoices but no contract or written agreement, the mediator asked us if we knew what the parties to an verbal agreement were called. “Litigators,” he answered. Thus, the message was driven home that you should always get an agreement in writing.

Even though most of us are familiar with this old adage, we often fail to follow its guidance due to what appears to be a simple and straightforward arrangement or because of a reluctance to appear as being too difficult to the other party. However, putting the terms and conditions to an agreement down in writing actually helps to clarify and facilitate deals, rather than complicate things. Both sides are benefitted by clearly spelling out what is being agreed to, exchanged and expected of each other. Further, if you think that the other party will be put off by your request to put the agreement in writing, how cooperative do you think they will be if there is a problem in the future with your oral contract?

A written agreement can take many forms. It does not have to contain page after page of small font legalese that no one but the lawyers will read, although complex transactions and those involving a large amount of money will, of course, require a more detailed written agreement. At the very least, make sure it is dated and attempt to accurately get down who the parties are, what the product or service being provided is, how much will be paid, the timing for performance, and a signature for both sides. If a formal written contract feels a little excessive, this can be achieved in a simple letter agreement written from one side to the other with a signature line at the bottom for acceptance and approval by the recipient. Bare minimum, send an email and ask the other party to reply to it indicating their agreement to its contents.

Taking a little time on the front end to put the details of an agreement in writing will save you time, headaches and possibly money on the back end if you do not. It will create a guideline for adhering to the agreement and a reference for what to do when somebody does not. And, if there is a breach and the agreement is not in writing, imagine yourself having to prove the terms and conditions when attempting to remedy the situation, in court or otherwise. In addition to our mediator’s definition of the parties to a verbal agreement, remember that an oral contract isn’t worth the paper on which it is written.