Does a contract have to be in writing? It is recommended, but it is not required. If that's all you came for, you're free to go.
However, the real important information is in this article, so if you want to make sure you don't make mistakes with your contract, stay a little longer.
In this article, we will cover why contracts are not required to be in writing, why it's recommended that they are, what your signature means, singing protocol, and enforcement.
So keep reading to become a contract enthusiast.
Does A Contract Have to Be In Writing?
So does a contract have to be in writing? Well, as we said earlier, no, but that doesn't mean that it should orally-enforced.
To further expand on what was previously mentioned, most contracts can still be legally enforceable, regardless of them being oral or written. However, some contracts are meant to be in writing only, otherwise, they are not binding.
And because oral contracts are difficult to enforce, as there is no defined record of offer, acceptance, or consideration, it's credibly important to understand which types of contracts have to be written for validity.
In general, the next types of contracts have to be written for binding enforcement. Any contract that is befitting of these categories and has been entered into orally does not automatically constitute being void. But they are certainly avoidable and can be rejected or affirmed by any of the parties at any point in time.
- Agreement to pay a debt for somebody else
- Contracts that take over a year to complete
- Real estate sales
- Real estate leases of longer than a year
- Transfer of property upon death
- Contracts that last longer than the expected lifespan of a party
- A contract for a specific amount of money (state-specific)
As you can see, the list is not exhaustive, so don't expect to be able to create binding oral contracts in any field of experience beyond those listed.
How Does Contract Law Play Into This?
Yes, there is such a thing as contract law, and it is usually maintained and governed by the common law of the state. Meaning each court will interpret the particulars of a contract differently.
In general, the baseline elements in a contract are mutual assent, adequate consideration, capacity, valid offer, acceptance, legality. A contract can be categorized as multilateral, bilateral, unilateral.
A unilateral classification befits of a promise from a single party to another. A bilateral and multilateral classification befits of a promise between two or many more parties.
As mentioned, a contract can certainly be oral or written. It can be expressive in writing or implied upon the conduct of someone's promise. Even though the contract can be oral, it is credibly impossible to prove.
Contract Baseline Elements
Now to further expand upon the standards of a contract, we will take a look at the baseline elements as mentioned earlier in greater depth.
In every contract, there must be a valid offer. The offer is the appropriation of someone who is bound to the agreement, thus promises to fulfill his duty in regards to the agreement, should the other party accept.
Before the recipient part accepts the offer, the party of offer can revoke it. But if the offeror does not revoke it, the offeror can with no discretion accept or counter-offer.
If the recipient party chooses not to accept, they can counter-offer, thus providing a new choice for the offeror. Each contract must have something of value, which is referred to as consideration. In premise, consideration is usually referring to monetary value. A promise to perform is rarely enough.
In some contracts, consideration can be substituted by you. It states that one party is relied detrimentally upon the others promise to perform under the guise of the contract.
Each party has to have legal capacity to bind themselves in contract with the other party. For instance, a contract entered by a minor can be voidable after the minor has become an adult.
To add to that, parties that are temporarily or permanently disable can still have the legal capacity to enter the contract.
What Does Your Signature Constitute In Contract?
When you choose to sign a contract, you're implying certain things about your intent. Because of this, the contract does become binding, which means legal enforcement is a fully-fledged possibility.
Here is what your signature constitutes:
- You have read the entirety of the contract
- You have agreed to the outlined terms and conditions
- You have the intent to enter the contract
- You are legally capable (authorized) to sign the contract
- You are mentally competent to sign and fulfill the contract requirements
Also, each contract should be filled out fully, meaning all blank lines have to be filled. Ensure that the other party's signature has been filled and that you have a copy of the contract that has both signatures. If you have signed online, each party has to legally possess a copy.
There are also some circumstances in which you should not sign a contract, and they are:
- Have unfilled blanks, such as date, item or dollar amount
- You are under protest & duress (threatened/forced to sign it)
- You don't understand the entirety of it and want to review with a lawyer
And that's about it for signatures. Let's move on to signing protocol.
It's a good idea to familiarize yourself with contract protocols, which will ensure that you execute your contracts in a timely fashion without issue. Not only will it help you expedite your deals, but failing to follow through the formalities can cause delays. Contracts regularly go through multiple drafts before the final one has been created. For a contract to be executed properly, each party has to have the final version to sign. A draft will not suffice.
Only the competent signatory should sign a contract. A signatory is a representative who is authorized to enter and terminate legally binding contracts. Most often, the president or CEO of the company. Each party must have a copy of the agreement with the original signatures. Two copies with two pages for signatures should be created. Each port must sign both of the pages, and then receive the original.
Contracts are not executed and enforced until both parties have signed. A contract is only partially enforced with a single signature on it, but it is not binding. It is necessary for the second signature to be filled to officially set an effective date and enforce the agreement.
It's also recommended to have a trusted attorney to look through the contracts. Not only can they help explain terminology, but they can also point out any red flags that bring about a potential problem for the agreement.
If you need some contract docs and agreements, you can get them online.
Enforcement of Contract
And finally, contract enforcement can only occur if it is reasonable. Nonetheless, there are several defenses that are common to the enforcement of the contract.
For instance, if a part is a minor, drugged, or suffers from mental disability, there may not be an obligation to perform a contract.
If undue influence or misrepresentation has been employed at the time of signing, they have signed under duress, which means the contract is most likely not valid.
If a contract is one-sided and favors one party, the contract might be noted as unconscionable, thus void.
If a contract asks one party to break the law, then it is deemed in public policy to be unenforceable.
If a contract has been given a false impression at the time of contract, as in fallacy or mistake, it can be unenforceable.
If after looking at all conditions beyond the terms of the contract, and the contract general terms are vague, meaning they can be interpreted in many ways, this contract is voidable.
In some cases, extrinsic evidence is considered by the court such as to conduct between parties, the industry of terms used, manner of communication, so on, and so forth. Depending on these factors, the court might deem a contract void.
The covenant of good faith and fair dealing is the agreement between parties to the contract and their execution of it in a fair and honest manner, meaning not to take the unfair advantage over another. This is also a common defense.
In any case, these are just examples, and the list extends far beyond this, so do not rely on it under any circumstances.
Contracts Done Right
Now that you know the answer to the question of - "Does a contract have to be in writing?", you are well on your way to determining if it's worth the trouble to not write it.
In any case, whatever you decide to do will be your decision and the right one for that matter. However, we strongly recommend that you get your contracts enforced in written for, not only for your own safety but for the safety of others.
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