Do I Need a Written Contract?

Photo by: Thomas Martinsen

Photo by: Thomas Martinsen

You may have been in the situation where you had an agreement with someone else to do something. It may have been a family member, a friend, a customer, or a service provider. You or the other person didn’t want to go through the formal process of putting it in writing because you have a close relationship, don’t want to offend the other person, or don’t want them to think you don’t trust them.

Then something goes wrong.

You discuss it with the other person and now there’s a dispute as to what you both actually agreed to, or you never talked about what you two would do if x, y, z happens.

Do you have a breach of contract claim?

Maybe.

In this scenario, your first and most difficult hurdle in prevailing in a breach of contract lawsuit is the lack of a written contract.

There are multiple reasons why you would want a written contract. Here are a few:

  1. It gives clarity regarding each person’s rights and duties.
  2. The process of creating a contract forces the parties to think through the problems that could come up and how you want to deal with those problems.
  3. Written contracts (especially when there are multiple copies in various forms) don’t fade or morph as quickly as human memories.
  4. California law requires certain contracts to be in writing.

Which Contracts Must Be in Writing?

The law requiring certain contracts to be in writing in order to be valid is called the statute of frauds. In California, it is outlined in Civil Code Section 1624, which states that “The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent[.]” These include:

  1. An agreement that by its terms could not be performed within 1 year of its making.
  2. A promise to answer for someone else’s debt or default except in certain specific circumstances.
  3. An agreement to lease a property for over one year or for the sale of real property.
  4. An agreement to employ an agent, broker, or other person to sell or lease property for over a year in exchange for compensation or commission.
  5. An agreement that by its terms could not be performed in the promisor’s lifetime.
  6. An agreement of a buyer of real property to pay off a mortgage or deed of trust on the property; or
  7. An agreement to loan money or extend credit in an amount greater than $100,000 made by someone in the business of lending or arranging for the lending of money if the loan or credit is not primarily for personal, family, or household purposes.

The analysis of whether a contract is enforceable is a fact specific one and there are ways to save an oral agreement.  Read more about contracts.

Schedule a call if you have questions regarding an agreement, you may contact me or call (949) 529-0007.

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In: Contracts

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