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Don't Agree To An Oral Contract, Especially For These Four Reasons

9 August 2017 by Janet Myers

Breaches of contracts can cause substantial damage to your business operations. When signing a contract, do everything in your power to minimize the risk of a breach. One helpful advice is to avoid oral contracts which, although enforceable, face a higher risk of breach than written contracts. In particular, don't sign an oral contract for any of these four reasons:

The Other Party Insists On It

Proving an oral contract is harder than proving a written contract. They are also easily breached than written contracts. For this reason, you should be careful with those who insist on oral contracts with you. It might be that they don't intend to honor the contract, and they know that it would be easier to do so if nothing is written down. For example, a supplier who agrees to deliver your items in a fortnight, but doesn't want to sign a contract, is probably aiming at a longer delivery time.

The Other Party Doesn't Have Time

This is one of the top excuses people make when they don't really intend to honor an agreement. If the issue is important for your respective businesses, then you should find the time to write and sign the contract. Even relatively "minor" issues can generate major complications, and only a contract can save you from the complications. For example, if you need a plumber to replace a single pipe in your restaurant kitchen, you need a contract for it. What if the plumber messes up and causes costly water damage in your kitchen?

It Is Too Complex To Write

While contracts are meant for complex agreement, there are those who will tell you that the agreement is too complex to write down! Your antenna should be up when someone starts talking like that. If it is true that the agreement is complex, then that is the very reason you need to write it down so that everyone can peruse all of its terms and conditions before signing. After all, the human brain isn't set up to remember complex issues at will after a cursory discussion.

You Trust Each Other

Anybody who claims that you shouldn't sign a contract because you "know" and "trust" each other is deceiving you. Do you only sign contracts with those whom you don't trust? By signing a contract, you are signaling to the other party that you understand the issue at hand, the terms and conditions, and your role in all of them. In an oral contract, either of you can later claim that they didn't quite understand what the other party said. A signed contract provides the clarity to avoid such complications.

Hopefully, you will never use those flimsy excuses to forgo a written contract and opt for an oral one. Don't despair, however, if you had signed one and the other party has breached it. Consult a law office like Rudolph and Chonoles LLP to help you prove the existence of the contract and claim your damages.

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