Putting contracts in writing

Most people know that certain types of contracts are only enforceable if they are in writing, such as agreements to sell land and guarantees, however many other types of business deals are sealed with a handshake. Handshake deals are enforceable and may run perfectly smoothly, until suddenly they don’t. Sometimes things go wrong in business. Conditions change. Relationships go bad. Unexpected things crop up. And you can unexpectedly find yourself trying to enforce your rights when you can’t prove exactly what they are.

One problem with relying on verbal contracts is that the parties to the contract might have had different understandings at the time of what they were agreeing to. If each party’s rights and obligations are clearly defined, in writing, then there’s less room for subjective interpretation. Getting all the details in writing beforehand often helps to save time and resources later. It pushes both sides to resolve areas of disagreement at the start, rather than starting work and then finding out later that there are major differences as to what work is to be done, or how to do it.

Another problem is that memories can fade. If there’s nothing in writing, it can be difficult to prove that your version of events is the correct one, especially if the other party is willing to lie in order to obtain an advantage.

One way that SMEs can avoid some of these issues is to have written terms of trade that both parties sign, which can be attached to a quote or summary of work. Sometimes it can be as simple as sending an email summarising your understanding of the agreement and attaching your terms. If you do adopt this approach, it’s essential to make sure that the terms are signed before any goods or services are provided. 

So next time that you’re shaking hands on a business deal, make sure that you get it in writing. You can purchase terms of trade here or contact us if you need help with a contract.