The Importance of Agreements in Writing

If it wasn’t in writing, it didn’t happen! In the business world, deals are often sealed with a handshake and a verbal commitment. This can feel like the straight-forward, traditional way to make deals with others, but actually, failing to memorialize deals and agreements in writing is bad for everyone involved.  While a handshake deal may seem like a convenient and friendly approach, relying solely on oral agreements can lead to significant risks for our potential clients. In this blog, we will explore the pitfalls of oral agreements and emphasize the critical importance of formalizing business transactions and detailed agreements through writing to protect your legal rights.

Whether you are a tenant attempting to get an understanding from your landlord about their and your responsibilities, a customer working with a business trying to get an idea about the details surrounding a business transaction, or a business owner making deals to grow your business, we always tell our clients the same thing – GET IT IN WRITING, and make sure all parties sign the document in its final form. 

Ambiguity and Misunderstandings:

One of the primary drawbacks of oral agreements or handshake agreements is the inherent ambiguity and potential for misunderstandings. Verbal communication is susceptible to misinterpretation or misremembering, and what one party believes was agreed upon may differ from the other party's understanding. This lack of clarity can result in disputes, wasted time, and damaged relationships.

Memory Fades, Records Don't:

Human memory is fallible, and over time, details of verbal agreements can become hazy or forgotten altogether. This creates a significant challenge when trying to enforce the terms of an agreement or resolve disputes. On the other hand, a written contract or a writing that details what each party has agreed to serves as an enduring record of the terms and conditions, providing a clear reference point for all parties involved.

Legal Enforceability:

We hate to face it, but often parties cannot find common ground when they are having a dispute.  That’s when we have to talk about legal enforcement of a contract. Oral agreements, however well-intentioned, may lack the legal standing needed to protect your interests in case of a dispute. Courts generally prefer written contracts as they provide tangible evidence of the parties' intentions and commitments. Without a written and signed agreement, business owners may find themselves without a solid legal foundation to stand on.  When it comes to advocating for yourself before a judge, would you rather have a he-said-she-said dispute, or have all your evidence of the Agreement in black and white?

Changes in Circumstances:

Business landscapes are dynamic, and circumstances can change unexpectedly. Written contracts offer the flexibility to include clauses that address potential changes, ensuring that both parties are protected and have a clear roadmap for addressing unforeseen developments. With oral agreements, adapting to changing circumstances becomes much more challenging and disputes can arise when expectations fail to meet reality.

Professionalism and Credibility:

A well-drafted written agreement adds a layer of professionalism to business transactions. It signals to all parties involved that the terms have been carefully considered and documented. This formality not only builds credibility but also helps establish trust among business partners, clients, and stakeholders.

When we are working with clients, we always tell them to get things in writing and get the Agreement signed by everyone who is a party.  When the lawyers at our firm work with other lawyers or clients, we always get everything in writing to make sure there can never be a dispute about what was said or what parties can expect. While oral agreements may seem like a casual and expedient way to conduct business, the risks they pose far outweigh the benefits. Protecting your legal rights and minimizing ambiguity requires the formality of written contracts. These documents provide clarity, legal enforceability, and a solid foundation for navigating the complexities of the business world. In the end, the effort and time invested in creating written agreements are a small price to pay for the security and success of your business endeavors.  If you need help with a contract, give us a call – 703-771-9740.