Does a contract have to be in writing?

Date: Aug 12, 2014
Document Type: Article

Generally, there is no requirement that contracts have to be in writing. As we are constantly entering into contractual arrangements throughout the day we cannot be expected to document everything.

However, legislation requires that certain types of contract must be in writing. In most states, any dealings with interests in land (sale, lease, mortgage etc) or credit agreements have to be in writing. If you do not have a contract in writing you may not be able to enforce the contract, although there are some exceptions and you should seek legal advice if you are in this position.

Even if you don’t have to, it’s always safer to have the terms of a contract in writing, especially if money is involved. That way, both parties can be clear about what they are obliged to do and what they’re entitled to from the agreement. It also helps if a dispute arises about the contract.

You can make your own written contract, although we would not recommend it. The contract should list the terms of the agreement and have both parties sign and date the document, and to put it beyond dispute that the parties intended to enter into the contract, they should generally exchange signed contracts. At this point, with some exceptions, both parties will be bound by the terms set out in the signed contract. 

However words are tricky. You have to be very careful about the language you use and the meaning of the terms that you record. It will always be possible for someone to pick a fight about the meaning of the words. A lawyer with experience in drafting contracts will make it more likely that the document will reflect the actual terms agreed, and will be able to assist you if someone does dispute – or if you want to dispute – what the contract means. 

There are some written contracts you’d be familiar with which you are not required to sign such as a car parking ticket, a dry cleaning docket or terms and conditions of a website. Even though you don’t have to sign these documents, you are sometimes bound by the terms because the law will sometimes imply your agreement as long as you had an opportunity to read the terms and didn’t object to them. This could be as simple as seeing a sign with the terms and conditions on it as you drive into a car park. It doesn’t matter that most people never read the fine print on the back of their ticket; you will still be bound by those terms.

Transactions involving interests in land are required by the law to be in writing and have more formal requirements. 

Even though some contracts are required by law to be in writing, if there has been what the law calls “part performance” of an agreement, or if someone has done something to their detriment in reliance on a representation made by another party to the contract, the Courts will sometimes enforce the agreement, or are awarded damages (compensation) if the agreement is breached. 

Contract law is central to our economy. The rules have been developed over hundreds of years. They are very complex.

If you require assistance drafting a written contract or in forcing it, or defending a claim made by someone else, please do not hesitate to get in contact with Craddock Murray Neumann today.

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