Ask the Esquire "LAW BLAWGS" By Tonna Farrar, Esq.

06/09/2017 11:34 AM | Julie Johnson (Administrator)

Put it in Writing!  Why You Need To Contract

Why do you need to sign a contract? But we’ve been friends for many years….or we are family!  Can’t we just do this on a handshake or by email? 

As women business owners here in Willamette Valley, we are often friends with those who we do business with.  Or, many family owned businesses enjoy great success in the Valley, with families working together on a daily basis.  You could do without a contract, but in doing so, both parties leave themselves open to later disagreement or potential hassles that a signed contract would avoid altogether. Consider these points:

  1. A Contract Describes All Responsibilities: Rather than guessing or assuming what each party’s responsibilities are based on history, custom or your own thoughts, you’re better to have everything in writing. This will help avoid later confusion or disagreement and clearly sets the precise expectations from the very start.  I have always insisted on contracts with very good friends if we are going to do business together – it prevents later hurt feelings and ensures open and thorough communication from the start to confirm consistent goals and expectations.  And an email chain confirming an agreement – while better than nothing - can nonetheless be tough to parse through at a later date, leading to the question of whether the parties truly agreed on a final and clear agreement.
  2. A Contract Establishes Timeframes.  If you need work performed within a certain time frame, a contract binds the parties to that time frame.
  3. A Contract Aids In Collecting Payment. A binding contract provides a legal document establishing an agreement to be paid for services rendered, and the terms for that payment.
  4. A Contract Provide Guidance If The Parties Later Disagree.   If the relationship between the contracted parties deteriorates, a contract outlines the previously agreed upon steps required for dissolving the relationship or if litigation ensues, provides the court with the contractual requirements to enforce the duties.     
  5. A Contract Can Help Cover Legal Costs If The Parties Litigate.  In many states, a successful party in a lawsuit may still not be awarded her legal fees and court costs unless the parties signed a contract providing for those fees to be paid by the losing party.  Depending on the dollar value at issue in the dispute, that can mean that it’s not economically justifiable to sue to pursue your rights because your legal fees may equal or exceed the value of the dispute itself.

Ok; so can you just pull up a contract example online and fill it out?  I can’t tell you the number of times I’ve had a client come to me after a relationship has gone sour – only to give me the contract they wrote or copied from the result of a Google search thinking that would save the day.  Most of the time, there are one or more provisions in that contract that have the opposite meaning than what my client intended  – or even worse – obligated them to liabilities they didn’t realize it did!  Consulting an attorney can help you determine whether you need to have a contract written, and can ensure it’s done right and in your favor.

Tonna Farrar is an attorney in Newberg.  She has wide experience in her twenty years of law practice, and most recently, after a decade of litigating multi-million dollar class actions for a national firm, she is happily returning to her roots of providing highly skilled small business and personal legal representation.  She can be reached at 913-530-6900 and offers a free 30 minute consultation to WOWmembers.

Tonna K. Farrar, Esq.

Bonnett, Fairbourn, Friedman & Balint, PC

tfarrar@bffb.com

Located in Oregon

 

Main Firm Address:

2325 E. Camelback Road

Ste. 300

Phoenix, AZ 85016


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