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David Toback, Attorney at Law
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Do All Contracts Have To Be In Writing

A common question that business owners tend to ask regards whether oral agreements are enforceable. There seems to be an urban myth that they aren’t, or that if you “don’t have it in writing” then an agreement can’t be enforced. In fact, most oral agreements are enforceable, but some are not. Making sure that you understand which are and are not enforceable if not in writing can be key to preventing legal issues later on.

Why Oral Agreements Are Dangerous

As an initial matter, it’s always best practice to get any kind of agreement in writing. Even if you write your agreement on the back of a napkin, it’s better than having no writing at all.

That said, oral agreements are legally enforceable. The problem comes in proof—the old “he said/she said” problem, where two people have differing accounts of a transaction. In typical agreements, where slight variations of wording can make a significant legal difference, it’s common for parties to have differing accounts of the language used, or of what was said to whom.

Take, for example, this offer: “I’ll give you 20% of my business when it sells, if it sells for more than a million dollars and in the next six months.” The other party may hear that as “…sells for more than a million dollars or in the next six months.” That variation between and/or makes an enormous difference in the meaning of the agreement, and the rights of the parties.

When Agreements Must Be In Writing

Some agreements can’t be oral, ever. This includes any transfer of interest in land or real property. It may seem like common sense to always have a written real estate contract, but even an agreement where a party casually promises to transfer property to someone else in return for work performed, or for service, must be in writing. And while leases can be oral, they must be in writing if they are longer than a year.

Contracts that can’t be performed in less than a year must be in writing. This is the topic of a lot of litigation, as courts often struggle to define what kind of agreements can and can’t be performed in a year. Generally, if a party’s obligations are capable of being performed in a year—even if it may be difficult or even implausible—the contract can be oral. But an agreement to pay a certain amount over a period of years, or to perform a task that will be done in stages throughout a number of years, may legally have to be in writing.

Agreements to pay the debt of another or assurances that someone will “make good” if another person defaults must be in writing. This is often the case with personal guaranties, or co-signors who are obligated to pay in case the borrower defaults.

Don’t leave your business to chance. Make sure your agreements are in writing, and enforceable. Contact Tampa business attorney David Toback to discuss your needs and protect your business interests.

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