Contrary to what some believe, an oral agreement can be enforceable, as long as the elements of a contract have been met. However, there are major advantages in having an important agreement reduced to writing.
Written Agreements prevent disputes
Firstly, having a written agreement ensures that there is no doubt or disagreement as to what the agreement was. This significantly reduces the risk of disputes later on. And the chances of a dispute arising when an important agreement is not reduced to writing are numerous:
1) Misunderstanding. Verbal agreements can sometimes involve the parties misunderstanding each other and agreeing to different things. A written agreement usually follows a verbal discussion and the chance of a misunderstanding is almost eliminated if the agreement is drafted clearly.
2) Unreliability of memory. Our tendency to forget things or not recall them accurately is often underestimated. Human memory is often unreliable, and this can result in one or both parties forgetting some of the terms of the agreement. In such an event, the parties have their written agreement to refer to and prevent/resolve any confusion caused by forgetfulness.
3) Dishonesty/ bad faith.Whilst most people are generally honest, we all know that there are crooks out there who will exploit the fact that there is no written agreement by not complying with their end of the agreement. Furthermore, even a usually honest person can potentially act dishonestly if they are under financial pressure or have a gambling problem. Simply put, you are less likely to be ripped off if your agreement is put in writing.
Written Agreements make your dispute shorter and less expensive
Of course, having a written agreement does not guarantee that there is no dispute. However, it does mean that disputes are likely to be resolved sooner and in your favour than if you only had a verbal agreement.
If you have a written agreement, the only dispute can be whether the agreement itself has been breached, as you can easily prove what the agreement is. Any court that hears the matter needs to compare the written agreement to what happened, which is often a fairly simple and straightforward process. In other words, in practice all you would usually need to prove is:
1) that the agreement was breached
However, in the case of a verbal agreement, a court has to determine what the agreement was before it can be satisfied that the agreement has been breached. In other words, you will need to prove:
1) that there was an agreement
2) what the agreement was; and
3) that the agreement was breached
Needless to say, proving all three is often going to be much harder. Proving what the agreement was will usually be the hardest thing to prove. If your agreement is not in writing, it’s going to be your word against the other party’s. If you are lucky, there will be independent evidence which supports your account of the agreement and hopefully saves you. If not, any trial will come down to who is the more persuasive witness, and there’s no way to predict the outcome in those cases.
For these reasons, any dispute is more likely to be far shorter if your agreement is in writing. Once a dispute arises as a result of the other party’s breach, the other party is more likely to settle on terms favourable to you as they will normally be unwilling to take it to court. And for the same reason, any court proceedings are more likely to be resolved in your favour.
Written Agreements can preserve the relationship
Unless your agreement will be incredibly simple, it is a very good idea to see a solicitor to draft your agreement. The advantages of doing so are numerous:
1) Solicitors are good at drafting documents in a clear, concise and legally effective manner
2) Solicitors might be able to advise you which parts of the agreement may be void or unenforceable, and how the agreement can be amended to avoid such an outcome
3) Solicitors are able to think of issues that you may not have considered eg: how can the agreement be terminated? Should a provision be made for a renegotiation after a set period of time? Should timeframes be included to ensure the parties comply with their obligations in a timely manner? How will a key term of the agreement be defined? What happens if the agreement is breached? And so on.
4) Solicitors can insert ‘standard’ clauses in the agreement which strengthen and improve it.
If your agreement is important to you, getting a solicitor to draft it is the best decision you can make.
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