Do I Need a Written Contract?

Do I Need a Written Contract?

Spoken like a true lawyer, but it depends.

In Oregon, certain types of contracts must be in writing to be legally enforceable.  Some examples of these types of contracts are agreements:

  • that cannot be performed within a year
  • to guarantee or assume the debt of another
  • by estate executors or administrators to pay the debts of the testator or intestate estate
  • made upon consideration of marriage (think prenuptial agreements)
  • for leasing of property longer than a year
  • for real estate sales and property interest sales,
  • for certain real estate broker agreements
  • and promises to lend money, extend credit, or forebear payment of debt.  

These specific rules are set forth in the Oregon Statute of Frauds:

The application of this Oregon law covers a wide-variety of subject areas regarding contracts from real property to domestic relations to financial matters.  Even if a written contract is not legally required, there are important and good reasons to always consider a written contract before you negotiate or engage in agreements with others.

Written contracts are designed to memorialize the respective and mutual understandings of the parties to a contract.  Having a clear understanding of “your deal” is imperative to ensure you get a fair deal, the deal you intend, and understand the legal rights, risks, and obligations of the parties.  Often times, clarity and certainty are worth the relative small expense to avoid bigger headaches and costs when things do not go as one party expected.  

A well-drafted written contract will also address issues like default conditions and remedies and other legalities that can help you avoid costly litigation and expense if your deal goes South. Depending on the nature of your contract and any related sensitive issues addressed by it, which may include confidential business information and the like, you can also take steps to agree to appropriate alternative dispute resolution (ADR) mechanisms like mediation and/or private arbitration to resolve related disputes in a more private manner.  

Many non-lawyers assume making a “contract” means it must be in writing.  That is incorrect.  You can make a contract orally as well as making one in writing.  However, the questions of contract validity and scope are often at issue in oral contract disputes.  Classically, these types of disputes become a “he said/she said” situation, which ultimately resolved by a judge or jury.  

Consequently, strongly consider consulting with an experienced and competent attorney to protect yourself and your legal interests.  In addition, if you are presented with written contracts, you should also have those reviewed by legal counsel before you sign.   The law will generally assume that the signer of a contract understands what is agreed to by signing, even if in actuality one or more parties to the contract lack a real understanding.

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