Failure To Reduce An Oral Contract To A Formal Written Contract Can Result In Problems In Contract E

Failure To Reduce An Oral Contract To A Formal Written Contract Can Result In Problems In Contract E

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Oral contracts sometimes seem the quickest, simplest and most cost effective way to proceed with a business transaction. It may also appear to be a way to test the received goods before signing a written agreement. Many types of oral agreements are not enforceable and in those situations where they may be enforced, the legal process can be more costly and subject to a greater risk of loss than a written agreement.

The law requires that certain kinds of contracts, like contracts for the sale of goods over $500.00, be in writing. When such contracts are not in writing, they may only be enforced in limited circumstances, such as when the party resisting enforcement of the contract admits that a contract was made or there is other evidence sufficient to show that the parties intended to make a contract. These legal rules determined the outcome of a recent Illinois Appellate Court case. In that case, the defendant allegedly made a verbal agreement with the plaintiff to purchase equipment and the rights to work at certain events for a concession business. The defendant made a down payment while they waited for the approval of a bank loan for the rest of the $150,000 purchase price. Following a season of poor business, the court reported they returned the equipment without having paid the full purchase price. The plaintiff claimed that the defendant had breached the oral contract. Their claim was denied by the trial court, which found that there wasnt enough evidence to establish that a contract had been made. However, the appellate court overturned the trial courts ruling, concluding that an offer to sell the concession business had been made by one party and accepted by the other. The fact that a defendant admitted that a contract existed was a point raised by the appellate court when finding the contract had been breached.

If there is no clear written contract, many times the court will have to look at the statements made by the parties and their conduct to determine whether a contract exists and what the terms may be. This process places both parties at risk of potential loss of the case depending on the facts which can be actually proven in court and the courts determination of the admissibility, credibility and importance of the evidence presented. As shown by this case, a disputed situation which might be capable of a simpler resolution may evolve into protracted and expensive litigation if the rights of the parties are not clear.

A written contract helps remove doubts concerning the content of an agreement and the intent of the parties to enter into a contractual agreement. You should understand that a verbal agreement involving an offer and acceptance can be legally binding but can ultimately be more complicated than a written agreement. If you have questions the need for and terms of a written contract for a specific transaction, a lawyer can help you understand your rights and obligations.

This article is intended to present general information for educational purposes, is not legal advice and should not be relied upon in connection with any particular matter. The reader is advised to immediately retain their own separate legal counsel with respect to any specific legal issue. Rights to bring a claim will expire through the passage of time by the applicable statute of limitations.


About the Author:
Ralph E. Elliott practices law at Law Offices of Ralph E. Elliott, A Professional Corporation which is comprised of Attorneys in Freeport, Illinois who have over 34 years of experience including an Estate Planning, Elder Law, Business and Personal Injury Law practice. The firm is situated at 1005 W. Loras Drive, Freeport, IL 61032 which serves business, individuals and the agriculture community in Northwest Illinois.



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