Written contracts are commonly used in business to establish a formal legal relationship and to set out the terms of any agreement between the parties.
Businesses should be aware however that whilst there is no legal requirement for some contracts to be in writing, at the other end of the scale, the law requires that certain contracts must be in writing for them to be recognised and enforced in a court of law (e.g. transfers of shares or sales of property).
Sometimes the law goes further and says that certain written contracts also need to be signed in a certain way, or they too, albeit written and signed, may not be enforceable.
Many day to day trading contracts are not actually required to be in writing to be recognised by the courts (although there are certain pre-requisites for a contract to exist).
A written contract is usually preferred for commercial transactions so that the ‘rules of play’ between the parties are clear (e.g. what is bought/sold, for what price, when is payment due, and what happens if a product is late/defective, etc).
If written properly, a contract can form part of a business’ professional corporate image (indeed it is often expected by bigger businesses who might be purchasing goods or services).
When it comes to trading contracts, many businesses use standard terms and conditions of sale, which are written, but not always signed by the customer. This is permitted, but as long as the customer actually had a chance to see the terms before it entered into the contract (there are laws on this and it is key to get administration processes right).
So remember:
You may actually have a contract even though there is nothing in writing.
In some circumstances even if you have signed a contract it might not be enforceable.
If you use written standard terms of sale and your administration processes aren’t right, those terms might not be enforceable.
If in doubt, seek legal advice.
If you want to know more or have any questions, then contact Tracey today: tracey@law-point.co.uk or call 01202 729444.
