Do My Contracts Always Need To Be In Writing?

So you have decided to start a business or already have a thriving business and if you are like a large number of new business owners you rely on verbal promises that eventually get broken.  The truth is that most people get carried away when presented with a new idea or a new business venture and ultimately assume that people are inherently trustworthy.  Basically, believing that people will do what they say they will do.  I hate to break it to you, but that assumption is usually false just like saying the word “never” which is why we say “never say never”.

Are Oral Contracts Enforceable by Law?

While oral contracts contrary to popular belief can sometimes be enforceable, they usually are never in the best interest of the parties.  You end up in a “who said what” battle. To put it simply, protect yourself and your interests and get your agreement in writing even if it doesn’t need to be.  This includes establishing written agreements between you and any business partner, you have from day one. If you haven’t done this already, please stop reading this and go sign an agreement with your partner. This is of utmost importance because sometimes, the assumptions between two parties could be different. Two people can say the same thing but mean entirely two different things. Contracts are a part of everyday business from vendor agreements to purchase agreements, from independent contractor agreements, to leases, employment agreements and partnership agreements. So if you want to stay on as or be a business owner, you might as well get used to signing them.

What Type Of Contracts Needs To Be In Writing?

Having said all of that, I bet you are wondering what type of agreements need to be in writing versus which don’t need to be. Let’s dig in.  In most states in the United States, there are certain types of contracts that MUST be in writing to be ENFORCEABLE. These contracts are governed by the STATUTE OF FRAUDS. We in the legal field usually use the phrase MR. SOUR to help us remember what falls under this statue. (Contrary to popular belief about lawyers and our smartness :), we still do need fun mnemonics to remember key terms).  MR. SOUR means Marriage, Surety, One Year Contract, UCC Sale of Goods of $500 or more and Real Property.  The statute of frauds basically require that these types of contracts be memorialized in writing, must be signed by the party to be charged(breaching party), with sufficient content that establishes the existence of a contract between both parties.

Marriage: These are contracts in consideration of marriage.  As business owners this may not necessarily apply to you but remember if you want a pre-nuptial agreement between you and your spouse, it needs to be in writing and signed.

Surety: This is when you agree to pay for the debt of another. Think a cosigner or a guarantor. Note that this debt cannot be for your own economic advantage, only the person you are acting as a surety for.

One Year Contract:  Any contract that can’t be completed in a year. Contracts with an indefinite duration generally do not fall under the statute of frauds regardless of how long the performance actually takes.

UCC: The Uniform Commercial code is fancy legalese and you don’t need to know the codes, but what you need to know is that all sales of goods which this code governs, requires that any sale of good (not sale of service) of $500 or more must be in writing and signed. The exception to these types of goods are those that have already been accepted by the buyer, goods where partial payment have been made and contracts to manufacture specialty goods. For example, if you ask a store to monogram a shirt with your initials, it will most likely be enforceable if the monogram has been put in place since it is specially for you and no one else might want it.  You get the idea.

Real Property: This relates to the sale of an interest in land. Fancy word for sale of real estate or real property or rental leases of more than a year. It must be in writing. Most states will make an exception only for leases that are shorter than one year.

What Is Sufficient Content to Establish a Contract For The Statute of Frauds?

So you might be wondering what type of written agreement is enough to satisfy the requirements of the Statute of Frauds. While the contracts don’t have to be extremely technical, they do need to contain the following. The names of the parties, the subject of the contract and the conditions of the contract (because the condition requirements are different for a sale versus a service agreement, it is important here that you have an attorney review this part). Lastly, the person who is being accused of breach must sign the contract.

Ultimately, Statute of Frauds will vary from state to state and on what content should be listed, so you should obtain legal advice about your contracts from an experienced attorney licensed in your state of business.

Ayesha Chidolue is the Managing Attorney at The Chidolue Law Firm. We are a boutique Business and Intellectual Property law firm that act as trusted legal advisors to business owners. Ayesha Chidolue is licensed to practice law in the states of Florida and New York. At The Chidolue Law Firm, we offer comprehensive contract review and contract drafting, so that you can sleep easier and get paid more often. If you need legal assistance with your business, we will be happy to assist you. Please contact us at or call us at 407-995-6567.



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