LEGAL BENEFITS OF A WRITTEN CONTRACT
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Often times, people ask questions like – can an oral contract be enforceable in the court of law?
Firstly, I want to differentiate between an oral contract and a written contract before answering the above question. One needs to know the advantages, disadvantages and the elements of a valid contract before proceeding into any sort of contract.
An oral contract is a contract which its terms of agreement is agreed by spoken communication, while written contract is a legal document that summarizes the agreement between parties. However, the advantages and disadvantages of oral and written contract is that:
Oral contracts can provide ease, convenience, and flexibility for the day-to-day of a business, while written contracts can take time, effort and cost.
A written contract can be proven easily and does not depend on the memories of other parties. But if you go into an oral contract, it is harder to prove the existence of the contract because; the existence of the terms must be proved by the memory of other parties as evidence.
The elements of valid contracts are:
Mutuality of obligation
Competency and capability
As an entrepreneur or a career person, you must consider some factors when going into an oral agreement. The under listed factors should be considered:
Trust – Is the other party someone you can trust with an oral contract?
Business value – Know the importance of the transaction to your business/reputation
Legal help – Are you willing to hire a lawyer if any dispute occurs?
Validity – Can you prove the existence and terms of the agreement in court?
Terms and conditions – Are the terms and conditions clear and understood by all parties or you need a witness?
Personally as a Lawyer, I encourage my clients to have written contracts where all terms are penned down, signed and accepted by all the parties involved. Although, not all contracts needs to be written, but under the Statute of Frauds, certain contracts must be written in order to be enforceable, like transactions involving real estate, promises to marry, agreements to pay a third party's debt and any transaction in which performance cannot be completed within one year.
Thus, both contracts can be enforceable when it has the entire valid element that a contract should have.