In a Bind?
In this fast paced business world, it’s not uncommon for parties to never get around to doing a formal contract, especially if they’re very experienced and practiced in what they do.
Sometimes people will exchange a few emails, or text messages. It could just be a quick chat over a pint (that’s my favourite way of doing business!). When things go wrong, the conversation with me often starts with the client saying that there’s no contract, and me having to explain that there is always a contract, and they are bound by it, even though it’s not a written one. That doesn’t change the legal position, but it might make it harder to work out what the terms of the contract are.
The complete opposite of this is when clients proudly show me their contract, and tell me that they must be in the right, because what they want to do is set out in writing, signed by both sides. If that were true, people wouldn’t go to jail for taking out contracts to kill people – just because you have a contract to do something, doesn’t mean it’s lawful and so doesn’t mean it’s enforceable.
Even if you do have a properly lawful and enforceable agreement, it might still not be straight forward. Contracts can be amended by the acts and omissions of the parties – or put simply, if you do the other party a favour and let them do something differently, you may find you’re forced to stick to that change in future.
So if you are entering into business contracts with people, what do you need to know?
- Just because you don’t have a written contract, doesn’t mean you don’t have a contract at all – so make notes of things you agree, keep text messages and emails where you discuss terms, and if possible, send an email that summarises everything before you start work.
- If you do have something in writing, even just an exchange of emails, make sure you all either stick to what is agreed, or agree to a change. If there is going to be a one off change, make sure there is an email saying it’s just a one off change.
- Don’t be afraid to insist that the terms of the agreement are honoured, or be aware of the consequences if you let the other side change how things work in practice.
- Just because you’ve agreed to something in writing, doesn’t mean it’s enforceable.
- If all else fails, get in a professional. If you think it’s too expensive to get in a professional, wait until you see what it costs you to get in an amateur!
Kleyman & Co Solicitors. The full service law firm. For when you’ve got a binding contract, or are in a bind over a contract.