A contract doesn’t have to be in writing to be enforceable. Many industries, such as construction, routinely rely on verbal agreements. But verbal agreements are not without their problems. The two main areas of concern are: (1) establishing mutual assent and (2) determining the subject matter.(See our previous blog on vendor contracts.)
Assent in verbal contracts can be established by course of conduct. This means, saying something such as “we are good to go” or paying the entire purchase price would reasonably lead the other side to believe you were accepting the contract terms.
Similarly, combined actions and words can express mutual assent. For example, if a seller says, “I will sell you this car when you give me $5,000,” and the buyer delivers the seller a check for $5,000, this indicates assent (agreement) to the contract. But what happens if the seller delivers a different car than the buyer was expecting? That’s the other problem with verbal contracts: what happens when there’s disagreement on the terms?
Enforcing a verbal contract can be difficult and expensive. Creating a written contract can help avoid those issues entirely, as well as greatly reduce the headache of long, drawn-out litigation. The court’s job in litigation is not to write or rewrite contracts between parties but to enforce the contract as the parties intended. Having a written contract makes that much easier to determine and is crucial to protecting your business. You will have peace of mind that the court will only enforce the terms of the contract as written, and that you will not be held to agreements that you misunderstood or never meant to consent to in the first place!
If you are unsure about the status of your vendor contracts or have questions about how to set yourself up for success, contact Downs Law today. We have extensive experience in handling contracts for our clients and will be happy to help make sure your business is protected and is able to thrive.