don't learn this the hard way
Did You Get it in Writing?
With so much to do, small business owners often forget to get contracts in writing.
As kids, my sisters and I would try to enforce promises our parents made—like whether we could go to the movies or get a raise in our allowance. My ever sarcastic father would always reply, “Did you get it in writing?” As a construction contractor, he knew that it’s difficult to enforce promises when there’s no proof that a promise was made. Plus, he just really enjoyed teasing us. This article talks about the importance of getting all contracts in writing.
With so much to do, small business owners often forget that simple reminder I got so much as a kid. Now, in over half the Oregon business calls I receive, I ask my clients the same thing: “Did you get it in writing?”
It’s not that oral contracts are not binding—many of them are. They’re just much, much more difficult to enforce. As a business owner or manager, you should make it your goal to get all contracts in writing.
It’s always better to have something in writing rather than nothing. But the type of contract needed varies depending on the complexity, size, and risk of a transaction, as well as whether the transaction falls within the statute of frauds.
Complexity deals with the nature of the job. If there is room for interpretation on what the work entails, you need a trained eye to specify your obligations exactly. For very simple matters, it’s often enough to have a note scribbled out and signed by the parties. For more complex matters, you should consult your attorney. Many of the contract disputes I see come down to confusion over one little term.
Size deals with the dollar amount or duration of the project. It makes sense that the larger the value, the more important it is to get it in writing. For large amounts, contact your attorney. For contracts lasting over a year, the statute of frauds requires a writing. So, for example, you probably don't need to get a contract with the neighboor kid who wants to mow your lawn. But you should probably get a contract if he's planning on spending several months landscaping. Clear expectations on the front end will pay dividends.
Risk combines the factors above. If you stand to gain or lose a lot of money or time—talk to your attorney. You should also consider the number of contracts you make when you are thinking about your risk. Even if what you do is simple, independent contractors need their own contracts. Whether construction contractors or bookkeepers—if you make oral contracts every day in your business, it’s worth it to get your own form.
It’s also important to remember that the statute of frauds requires certain written evidence for certain contracts. An oral contract simply won’t do. In addition to contacting you attorney for contracts that are complex, large, or high risk, generally, you should contact your attorney if you are contemplating the following contracts:
- Contracts dealing with marriage, such as a prenuptial agreement
- Contracts relating to surety, or securing the debt of another
- Contracts relating to land, mortgage, real estate, etc
- Contracts longer than 1 year
- Contracts for wills and executors
- Contracts for sale of a product or sale of goods more than $500
Good luck, everyone. And remember to get it in writing!
Learn more about the author, Maret Thatcher Smith.
Comment on this article
Posted by Julie Cascioppo, Seattle, Washington |
Nov 18, 2011
Posted by Natasha Packer, Everett, Washington |
Nov 18, 2011
I love finding articles like yours. Especially when I know someone who can use it! Thanks!
Posted by Harmony Coburn, Vancouver, Washington |
Nov 19, 2011
This is a good article. I don't know why, but I started putting things in writing at an early age - maybe because I have such a crappy memory and my sister always said "You told me...." and I couldn't remember so I had to do what she said! In any case, I agree completely and hope your article will reach those that put this part of doing business off. The contracts I do are as much for the benefit of my client as for myself - I feel it helps them to trust me that I am willing to "put it in writing".
Posted by Karl J Bos, Toronto, Ontario Canada |
Nov 21, 2011
With having a contract in writing, it is always best to have a law firm review the contract and hear what you want out of the contract, to make it a legal contract. With LegalShield, you just pay an affordable monthly fee and deal with all your legal matters, no matter how trivial or traumatic the situation may be. www.karljbos.com
- independent contractors
- small business