Must the contract be in writing?

That depends primarily on the nature and subject matter of the contract. If you orally agree to purchase your brother’s 1988 Ferrari that is in “mint condition” for $25,999.99, that agreement is legal. As a general rule, however, it is wiser to have the terms written in understandable language – plain English — to save future misinterpretations and errors.

Most states have laws (called “Statutes of Frauds”) listing the types of contracts that must be written in order to be enforceable. The purpose of the Statutes of Frauds is to prevent fraudulent claims from arising. Although the laws vary from state-to-state, the most common examples of contracts that generally must be in writing are:

(1) sales of real property;

(2) promises to pay someone’s debt obligations;

(3) a contract that takes longer than one year to complete;

(4) real property leases that run for more than a year;

(5) contracts for an amount or other consideration that exceeds the state’s threshold;

(6) a contract that will go beyond the lifetime of the one performing the contract;

(7) the transfer of property upon the death of the party performing the contract.

If you agree verbally to a type of contract listed in your state’s Statutes of Frauds without getting the agreement in writing, the contract is not enforceable, although there are some exceptions. Because state laws vary in this area, it is strongly suggested that you consult with your attorney if only to review the proposed contract. Do not wait until after you have signed. That can be too late.

Case Studies: Contracts and the Importance of Written Documentation

Case Study 1: The Verbal Agreement

John and Sarah reached a verbal agreement to sell a vintage car without formalizing it in a written contract. This lack of written documentation led to misunderstandings and mistakes, ultimately resulting in disputes and challenges in clarifying the sale’s terms.

Case Study 2: The Real Estate Transaction 

Mark engaged in a real estate transaction without establishing a written agreement. The absence of written documentation caused complications and disagreements concerning the transaction’s terms, leading to a legal dispute.

Case Study 3: The Long-Term Lease 

Sarah and John entered into a long-term lease agreement without documenting its terms in writing. This failure to have written documentation resulted in uncertainties and conflicts between the landlord and tenant, creating difficulties in resolving their respective lease obligations.