Many consider ‘gentleman’s agreements’ to be sufficient when they are purchasing goods or services. They could never foresee that a long-standing friend or family member would let them down. However, it happens. For one reason or another, disputes arise and often resolving the dispute is comparatively more straightforward when a written, comprehensive contract exists.
Why does a written contract help?
Proof of what was agreed
In the absence of a written contract, parties are often left piecing together documents that paint the picture of what was agreed between the parties, or worse still trying to recollect what was said between them (verbal contracts). Verbal contracts are often uncertain and can lead to ‘one word against the other’ or ‘he said she said’. If a dispute arises in these circumstances, there is a lot less certainty on who will be believed in court (if the dispute escalates to this stage).
It adds clarity on what was agreed
Without a written contract, the parties are required to tell the story on what was agreed between them. If there has been a passage of time, recollection can be difficult. The parties involved may not recall accurately what was required of them or their counterparts. This leaves obligations undefined and leaves scope for disagreement.
Specifications can be properly documented
In industries where technical requirements are key, a written contract is worth its weight in gold. What does it matter if a party deliver a 6mm bolt instead of a 10mm bolt? For particular work, it can be the difference between a machine working and it not, so can be crucial. Rather than leave this to guess work, contracts can be useful to set out what is required and what is acceptable.
If a dispute arises
It is a lot simpler if a dispute arises to look at the written obligations of a party to see if there has been a breach.
Resolving a dispute
Linked to the above point, if something goes wrong, the contract can provide a path to try to resolve an issue. Having a contract specify a way to help with problems can focus the minds of those involved and provide some guidance as to how to work things out.
It is often more cost effective in the long run for a solicitor to advise on a dispute if there is a clear, well drafted contract governing the parties’ working relationship.