Are Written Contracts Always Required?
In a world where agreements and commitments hold society together, the concept of a written contract has become an integral part of human interaction. Whether it’s a simple rental agreement, a complex business deal, or a marriage, written contracts are often seen as the cornerstone of legal certainty and protection. However, in recent times, the question of whether written contracts are truly essential has sparked debate, challenging traditional norms and highlighting the evolving nature of communication and trust.
The Foundation of Trust: Verbal vs. Written
For centuries, verbal agreements were the norm in various societies. A handshake or a spoken promise was often considered binding and rooted in personal integrity and honor. While these informal agreements worked well in small, tightly-knit communities, they lacked the specificity and evidentiary support that written contracts offer in today’s complex and interconnected world.
Written contracts emerged as a response to the need for clarity and enforcement in a growing global economy. They provide a tangible record of terms and conditions, reducing the ambiguity that can arise from oral communication. A well-drafted contract outlines each party’s obligations, rights, and responsibilities, serving as a reference point in case of disputes.
The Rise of Technology and Informal Communication
The advent of technology and digital communication has reshaped the way people interact and conduct business. Platforms like email, messaging apps, and video conferencing have enabled faster and more convenient communication, blurring the lines between formal and informal interactions. In this digital age, agreements can be reached with a few keystrokes, and sometimes the formality of a written contract might seem unnecessary.
However, this shift towards informal communication also brings challenges. Digital conversations can be easily manipulated, and misunderstandings might arise due to the lack of context and non-verbal cues. In legal terms, the weight of a written contract lies not just in the words but in the intention behind them. Written contracts mitigate the risk of misinterpretation by clearly articulating the expectations of all parties involved.
Cultural Perspectives: Tradition vs. Adaptation
Cultural norms and values play a significant role in shaping the importance of written contracts. In some cultures, a person’s word is considered sacred and sufficient to seal an agreement. In contrast, legal systems in other societies heavily prioritize written documentation. This cultural dichotomy highlights the diverse ways trust is established and maintained across the globe.
As the world becomes more interconnected, cultures collide, and practices evolve. Businesses, especially those operating on a global scale, must navigate these cultural differences while ensuring legal protection. In such scenarios, written contracts often act as bridges, translating intentions into a universally comprehensible format.
The Legal Backbone: Enforcement and Protection
One of the primary reasons written contracts are deemed essential is their role in legal enforcement. When parties enter into a written agreement, they not only outline their obligations but also establish a foundation for legal recourse in case of breaches. Courts and arbitrators rely on written contracts as tangible evidence to interpret the parties’ intentions and deliver justice.
Furthermore, written contracts provide a layer of protection against memory lapse and shifting narratives. Over time, people’s recollections of verbal agreements may change, leading to disputes. A written contract acts as an anchor, ensuring that the terms of the agreement remain consistent and clear.
Balancing Tradition and Progress
The debate over the necessity of written contracts is a reflection of the ongoing tension between tradition and progress. While modern communication tools offer convenience and speed, they also come with their own set of challenges. Striking a balance between maintaining cultural practices and adapting to the demands of a dynamic world requires a thoughtful approach.
Ultimately, the question of whether written contracts are essential depends on the context, the parties involved, and the cultural nuances at play. In an era where virtual interactions and international collaborations are the norm, written contracts continue to serve as indispensable tools for fostering trust, preventing disputes, and ensuring legal protection. While traditional verbal agreements might still hold value in certain situations, the undeniable benefits of written contracts make them an enduring cornerstone of contemporary agreements.
Video Transcript
Are Written Contracts Always Required?
Business owners have a goal of making sure that their contracts are enforceable. But the problem is, what if they are oral? What if they are not in writing? Or what if it is a thumbs up? You know, like, “Hey, I will paint your house for $500,” and the homeowner says (thumbs up). Is that gesture enough? Because it is not in writing. It is not even orally spoken.
Enforceability of Contracts: Oral and Non-Verbal Communication
So the problem is, how do you know when a contract is enforceable? Well, the good news is the law is very clear on this. If a person extends an offer and the other person indicates an acceptance of that offer, then there is a contract. It doesn’t matter if it is in writing. It doesn’t matter if it is spoken or not. A thumbs-up is enough. In fact, if Sally said to me, “Hey, Aaron, if you want to come paint my house on Friday, I will pay you $500,” and I look at Sally and I give no response and I walk away. But on Friday, I show up and I paint her house. I have accepted her offer through my performance. So as a result, there is a contract. The law does not require a contract to be in writing to be enforceable. It can be oral. It can be a gesture. It can be a nod. It can be some sort of performance like performing on the request in the offer.
Exceptions to Enforceability and Detailed Offers
Now there are some exceptions to this. Here are some of the big ones. Certain sorts of contracts have to be in writing under what is called the statute of frauds. For example, a contract that takes more than a year to perform or a transaction in real estate and a number of others that you can see by looking at the statute of frauds. We will put a link in the description below for an article on the statute of frauds so you can see which sort of contracts must be in writing.
Offer Details and Legal Doctrines
What are some other exceptions? Well, an offer needs to be sufficiently detailed for it to be accepted. For example, if you leave out the dollar amount, usually that means that there wasn’t sufficient detail in the offer. For instance, if Sally said, “Hey Aaron, I will pay you if you come to my house and paint it on Friday.” Well, if I come and paint the house on Friday, there is a question. What amount did she agree to pay me? Can she get off without paying at all? No, there are other legal doctrines that apply in that situation. These are doctrines in equity: it would be potentially promissory estoppel. Quantum meruit is probably the most likely legal doctrine that would apply because even though there is not a contract that is enforceable, under the equitable doctrine of quantum meruit (that is a Latin term), she would still have to pay.
Quantum Meruit and Known Pricing
Quantum Meruit
Quantum means quantity, or the volume and quality, but generally quantity is what quantum means. And meruit means the value or the merit of what is provided. So whatever the value of the paint job is that I provided would still need to be paid.
But there are scenarios where even if the price is missing, the contract would still be enforceable. So not under quantum meruit, but it would be an enforceable contract. Here is an example. Let’s say pork bellies. The price of them is listed on a public exchange or index. So everybody knows what pork bellies are every day, and we are talking about the bellies of pigs, but I am using this example because it is real. Pork bellies are traded on a daily basis. And there is some standard pricing around that. So if I said, “Hey, if you deliver 1,000 pork bellies to me on Friday, I will pay you.” And the person delivers a thousand pork bellies. Well, the price is known because it is a publicly listed price. So it wasn’t important in that scenario for the price to be communicated in the offer because it was essentially known or implied through the offer.
Contractual Detail and Illegal Offers
So you have to have sufficient detail for an offer to be accepted by another party. There are some other exceptions where an offer would be accepted, but the contract would not be enforceable. There might be some other issues there. They are more minor examples. I will give you one example. If somebody said to me, “I will pay you a thousand dollars to kill my ex-spouse,” and I said, “I accept,” is that contract enforceable? No, because it is illegal. And any contract to do something that is illegal is not enforceable.
Conclusion
So there are some extreme exceptions there, but going back to the general question, are written contracts always required? No. Contracts can be oral. They can be communicated in many different ways: emails, etc. There is no requirement that a contract be in writing unless it is the type of contract listed in the statute of frauds.
All right. If you haven’t already subscribed at aaronhall.com/free, you are welcome to check out our channel where we have all sorts of other questions from business owners and the answers provided to you. I do these videos as a public service, as a way to use my knowledge as a licensed attorney to help business owners avoid problems, spot issues to discuss with their attorneys, and improve the likelihood that you will have a successful company and successful life. It is great being here with you today.
