We do a lot of work with contracts, as lawyers do, and there are a few questions that our clients always ask. Here are a few common points of confusion, and their answers.
1. “No it’s not in the document, but I have a text message…”. If it’s not part of the contract, you’re out of luck! According to the parol evidence rule, once a written agreement has been signed by all parties, they cannot present evidence of any oral or implied agreement that contradicts or adds to the written contract. What that means is if you have an email chain, a phone call, or a text message that changes any term of the contract, it doesn’t matter! Although there are a few exceptions to this (fraud, for example) generally what can be enforced in a breach of contract claim is limited to the executed document. But, if you think there are parts of your arrangement which should be considered part of the contract, you can always prepare an amendment and ask the other party to sign it – this can help you to avoid misunderstanding if anything goes sour with your deal later on.
2. “I/they didn’t sign the final version”. If it is not signed by both parties, you DO NOT have a contract! Nothing is enforceable. Make sure you go through the effort of collecting the final signed version when you’re working on a contract. Don’t be laidback about it – it won’t pay off in the end.
3. “Does it really have to be in writing?” We’re talking about the importance of everything being written down in a signed, executed contract, but the reality is that it isn’t required, with several exceptions. We learned this when studying for the bar exam with the phrase “MY LEGS”.
Contracts that absolutely must be in writing under the Statute of Frauds are:
M: Marriage (prenups, marriage contracts)
Y: Contracts that will last more than one Year.
E: Estate – contracts where the executor of a will agrees to pay a debt of the deceased’s estate with his/her own money.
G: Goods – sale of goods for $500 or more
S: Surety – agreements in which one party becomes a Surety (i.e. guarantees) the other’s debt.
That being said, we recommend that ALL agreements be memorialized in writing and executed – otherwise how are you going to prove you had an agreement if you get into a (dis)agreement?
Contact us if you need help preparing an amendment to an existing contract or creating a contract from scratch.