Introduction
A written contract is a legally binding agreement between two or more parties. These are documents that lay out the duties, responsibilities, and commitments for every party involved. It can be a source of reference of the terms agreed upon by parties especially in complex deals.
It is a good idea to have a written contract notwithstanding that a cordial relationship exists between the contracting parties. This contract gives clarity to the whole transaction as terms and obligations are expressly spelt out. Thus there are no misunderstandings or disagreements in the future. It is much safer to have it written than to rely on someone’s word. A written contract will give you more certainty and minimize your business risks by making the agreement clear from the onset. Shaking of hands to seal deals or oral agreements are no longer in vogue or acceptable.
A written contract also helps ensure that everyone involved agrees on what is expected of them. This can help prevent disputes later down the road if things do not go as planned or if one party feels like they did not receive all their agreed-upon benefits from working together.
BENEFITS OF WRITTEN CONTRACTS
Written Contracts Offer Clarity
The major reason oral contracts fail is because parties change, memories fade, and one person’s version of events is often different than another’s.
Reducing agreements into writing allows parties involved to review and understand their roles/obligations in the agreement. If a written agreement highlights areas of dispute or confusion, parties can address and negotiate such areas before committing to the business.
Written Contracts Offer Protection
This is particularly true when a business partner invests a large amount of his or her own funds, intellectual property, or labor into an organization. A written contract protects the interest of parties. In the event that the partnership has broken down or upon failure of the business, parties may still exercise their rights under such contract. This may not be the case where there is no written contract that stipulates repayment of such money or ownership of intellectual property etc.
Written contracts help with enforceability
Not only is it advisable to get business contracts in writing, some types of contracts must be in writing to be enforceable. These include (but are not limited to) contracts for the sale of real property and agreements to pay debts owed. The implication of unwritten contract in these circumstances is that parties cannot rely on any oral arrangement to enforce their rights.
Written contracts can protect you from liability.
Contracts help to restrict the liability of parties to the specific terms and conditions expressly stated. Where there is a breach of the contract, the terms to be interpreted and enforced will be those terms spelt out and agreed by the parties. This may even include the process of dispute settlement amongst parties. Without these provisions, a lot of time and efforts will be spent in determining who is right or wrong.
Avoid expensive litigation proceedings
When a party to an agreement defaults in the contract, the written agreement can be used as a general reference on what the parties have agreed to determine who is in breach. Having a readily available written contract reduces the chances of bringing the issue to litigation proceedings, or even dragging litigation more than it may be necessary, which could be very costly and time-consuming.
Written Contracts Provide Proof of Details
A written contract can legally function as proof of details on whatever you and the other party have mutually agreed. It provides an understanding of the agreement between parties and obligations owed.
In order for a written contract to fulfill these purposes, it must be detailed. The rights and duties of each party should be defined clearly, with little room for interpretation. Issues like time for performance, payment terms, termination rights, and rights upon default should all be clearly stated.
A clear and well-detailed contract helps limit uncertainty in the event of a dispute. More so, all negotiations and concerns of parties can be properly captured in the contact. This makes it easy to determine whether there is a deal at all to document.
Engaging the service of a professional to draft written contracts.
Getting Help with a Written Contract
Merely writing down the terms of an agreement is quite different from drafting an enforceable contract that protects your business. It is important to seek the services of a legal practitioner at any stage of your contract. This is to ensure that your interest is well protected.
The benefits of a detailed, unambiguous, and well-written contract are extensive. It should be a best business practice to enter into written agreements with parties you do business with.
Overall, creating a strong written contract relies on using specific and clear language that cannot be misconstrued. While hiring a lawyer to draft your agreement might seem expensive to a businessman, the benefit of that decision cannot be monetarily quantified. It is a good choice because with a well-worded contract, you won’t have to pay expensive litigation fees if things go wrong.
Do you need legal expertise at any stage of contract? At Lawracles Legal Practitioners, our team of experienced corporate commercial lawyers offers professional services at any stage of your contract (negotiation, drafting, reviewing and enforcement). We also offer legal advices that can guide you in the corporate world and ensure your company’s success.
Contact Lawracles Legal Practitioners: office address, 18 Sekoni Safaratu street,Gbagada,Lagos State.
Email address: Lawraclesoffice@gmail.com , info@lawracles.com
AUTHOR
Sandra Nnaji-Ihuoma Esq.
Associate,Lawracles LP
Reference
https://www.upcounsel.com/advantages-of-a-written-contract
https://contiguglia.com/blog/7-reasons-why-a-written-contract-is-necessary/
https://www.hg.org/legal-articles/the-true-importance-of-written-contracts-in-businesses-and-transactions-39639