Technically speaking, it may be wise for you to put every single contract you ever use in writing. Having that paper trail can be important if the contract is then breached.
That said, the reality is that people often operate on handshake deals and other contracts that are never written out. Sometimes, they're working with friends or family members and feel like it's insulting to demand a written contract. Other times, they're just in a hurry and it seems easier not to do the paperwork.
Below are seven examples of when you must get a contract in writing:
- When real estate is being bought or sold.
- If the contract is going to take more than 12 months before it's finished.
- If someone is agreeing to pay a debt that belonged to someone else -- if you're taking on someone else's debt, for instance, or if they're covering yours.
- High-value contracts in which large amounts of money change hands.
- Any lease for a real estate property that's going to last for a year or more.
- A contract that transfers property if one person passes away.
- A contract that is set up to stay in effect even after either person's death.
Again, it's often wise to get contracts in writing regardless. Just because you're leasing a property for less than a year doesn't mean you don't want that written agreement to be on file. However, the examples above give you some idea of when it's utterly crucial to do things carefully and document all agreements. There's no room for error.
When making business agreements and drafting or signing contracts, always be sure you know your legal rights, how the contract impacts those rights and what options you have in the event of a breach.
Source: FindLaw, "What Contracts are Required to Be in Writing?" Oct. 27, 2017