“A verbal agreement isn’t worth the paper it’s written on.” -Unknown
If you are a parent, you probably have plenty of experience talking with your child about what they should or should not do, getting their assent, only to find the agreement cast to the wind mere days later. Unfortunately, not everyone grows out of breaking their promises–particularly if they stand to profit.
An exchange of emails or an amicable discussion on the golf course may just be the kiss of death for your company. The only thing that can truly hold your counterpart to his or her word is to fully document all the terms you agreed upon. Without clear evidence of the exact details of the agreement that you believe has been violated, the erstwhile other party will feel zero repercussion for his breach of your trust.
There is more than one way to enter into a contract–with some notable exceptions, verbal agreements are just as binding as written ones. Making a verbal agreement believing that it isn’t binding is just as dangerous, if not more, as entering into a business agreement without written documentation. Depending on the facts of the situation, an exchange of emails or friendly words could very well unwittingly land you in the midst of a business relationship you didn’t intend or other obligations–followed by a firestorm of litigation with nothing to help you prove your side of the story.
If money will change hands, a written contract is an absolute necessity. The protections of a contract are extensive and can include provisions for:
- The resolution of conflicts outside of the courtroom, with the help of binding arbitration or mediation;
- The state whose law will be applied to the case, and where the conflict will be handled;
- The reimbursement of your attorney’s fees, in the event you emerge from the dispute the victor;
- The clear documentation of the expectations both parties hold of one another –goods/services rendered, due dates, prices, and more.
You must never do without a contract merely because you trust the person you are doing business with. As much as they may have your interests in mind at the beginning of the relationship, it’s impossible to say what dangers the future might hold. Ultimately, the best ward against what could happen is a written contract, particularly one crafted and reviewed with the assistance of an experienced attorney.
We help business owners avoid costly legal disputes by crafting agreements and procedures to ensure you have all your bases covered. To learn more about our personal approach to business planning, call us today at 612-206-3701 or reach out via our online contact form to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.
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