Do you need a contract?

In Oregon, most verbal contracts are binding. Does that mean that you don’t need a written contract1? I’d venture to say that if you are engaged in a business deal or arrangement with another person or business then you should have a contract that outlines the terms of your agreement.

You can think of a written contract as insurance. If all goes well you might feel you didn’t need it, but if something goes wrong then the contract is like your insurance. A well written contract will document all material terms of your agreement, including price, scope, payment arrangements, default, remedies, etc.

What does this mean for you? There are many situations that you have likely heard of that can arise to cause a contract dispute. Often times one party is not satisfied with the work that the other party did, or unhappy because the other party did not do the work at all.  Another common dispute between parties is when one party does the work that was agreed to and sends a bill, but does not receive payment at all, or at least not for several months or without bickering about the amount of the bill.  What do you do in situations like these?

If you have a written contract then ideally you can look at your contract to determine your options.  A well written contract will document what to do for payment if one party doesn’t complete the work or it will detail what happens if payment is submitted late, or a bill is not paid at all; or the contract might document whether a late fee or interest can be assessed  and if so, then when?

While the fact of having the contract might not resolve your dispute or compel the other party to do what they agreed to do when they signed the contract, it at least is written documentation of the intent of the parties when you first entered into agreement and can potentially help you enforce your contractual rights and remedies should you need to consult an attorney and/or take legal action.  While anyone can write a contract, it’s probably a good idea to consult with an attorney who is experienced in the field to assist you with your contract.

Ultimately you might feel that you do not need a contract because “a man is good for his word”, you “shook on it”, or you are dealing with family or friends.  These are all reasons you might feel inclined to keep things informal.  However, even family and friends can disagree, forget what they agreed to, or change their minds. It doesn’t hurt to have your “insurance” just in case.

The information and materials provided in this article have been prepared for informational purposes only and do not constitute legal advice and do not constitute an attorney-client relationship between you and this law firm. If you believe you have a legal case or claim, you should contact an attorney promptly; strict time limitations may apply to your case or claim.

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