Introduction
I am often asked: Why have a written contract? After all, we enter into verbal contracts every day in our personal life with no problems?
Prevention is better than Cure
Benjamin Franklin stated “an ounce of prevention is worth a pound of cure”. In the commercial world, written contracts help to reduce costly disputes.
A carefully drafted written contract serves as an important point of reference for both you and the other party. Whilst there are no guarantees, having a written description of the parties’ rights, obligations and responsibilities:
prevents potential confusion between the parties;
helps to avoid ambiguity and uncertainty; and
there is less likely to be miscommunication and misinterpretation.
The costs of pursuing a legal dispute through the courts can run into thousands of pounds, if not tens of thousands of pounds! Putting in place a written contract or terms and conditions is a little like having an insurance policy. The hope is you never have to refer to them but you might be relieved if and when you do.
I have countless examples of disputes that may have been avoided had their agreement been set out clearly in writing.
A good written contract clearly states the responsibilities of all parties, often setting out things such as the outcomes expected, performance measures, timeframes and financial arrangements. Whilst it may contain some “legalese” (which often protects and/or clarifies the positions of the parties), it does not need to be complicated. In fact, the plainer the English, the better, in my view.
If a contract is not in writing, it may well be difficult to prove that you have a contract at all.
“A verbal contract is not worth the paper it’s written on!”
Comment
Along with many other transactions, circumstances etc, if not already done so, you might want to consider the following:
Sale and Purchase – Unless the supply of your service/product is simple and instantaneous, it is probably a good idea to have something in writing. Similarly, it is probably prudent to have in place purchasing terms and conditions;
Websites – If you have a website, you probably need terms & conditions;
Confidentiality – If you have discussions where you might divulge information about your company, it may be prudent to enter into a Confidentiality Agreement.
This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.