This is part two of a two-part series addressing why it is important to put a contract in writing. Part 1 can be found here. In addition to the legal requirements for a signed, written contract discussed in part one, what if an agreement is made on a handshake, and a dispute later arises about what was agreed upon? What if one party becomes incapacitated or passes away?
The exercise of reducing contracts to writing helps to crystallize exactly what you have agreed to do. If differences arise later, the written agreement is a helpful reminder that can resolve disputes and avoid litigation. The reality is that memories may differ about the terms of the agreement. And, when a dispute arises, one party may not be honest about what was verbally agreed upon.
Common sense helps to avoid litigation, and common sense requires that certain contracts be reduced to writing. Put nothing in writing and you may spend substantial time and resources later about what you thought you agreed to do months ago. Use common sense, rely on legal requirements, and err on the side of written agreements that are signed by all parties. One of the most effective uses of counsel is in drafting contracts to avoid potential disputes before they arise. It is much more difficult, and expensive, to seek counsel later because the contract was not put in writing and litigation is contemplated, or worse, you have been sued, and need counsel to represent you in court.
