When Contracts Need to Be in Writing

Clients are often shocked to discover that the vast majority of contracts do not need to be in writing.  When most of us think of contracts, we picture long written agreements and all parties executing their names onto this document.  In reality, a contract is merely a legally-enforceable agreement, and courts will enforce oral agreements in most instances.  Nevertheless, there are certain times when contracts need to be in writing.

Real Estate

Real estate transactions are one instance when contracts need to be in writing.  Purchasing a property is one of the biggest decisions people make in their lives.  Since this purchase usually involves substantial consideration, most jurisdictions usually require that real estate transactions need to be in writing.  However, the writing requirement typically extends beyond merely buying property, and encompasses additional transactions that involve real estate.  Indeed, most jurisdiction require that leases, licenses, easements, and other agreements that involve real estate need to be in writing.  There may be some exceptions when courts will enforce oral agreements involving real estate that involve short time periods, but in most instances, contracts involving real estate must be in writing to be legally enforceable.

Sale of Goods Over $500

Another time when contracts need to be in writing is when an agreement involves the sale of goods over $500.  Goods are movable pieces of personal property, and are distinguished from real estate and services.  If there is any agreement to sell goods over $500, most states require that the contract be in writing to be enforceable.  The writing requirement between merchants (i.e. professionals who regularly deal with sales transactions) is looser than individuals might think.  Indeed, emails with signatures, memos with letterhead, and other writings have been found to satisfy the requirement that such contracts need to be written down.  Of course, it makes sense that agreements for significant amounts of goods would need to be in writing, and most states require sales of goods over a certain amount of money to be written down.

Contracts that Cannot be Performed in One Year

Another time when contracts need to be in writing is when a contract cannot be performed within a year.  For instance, a contract between a supplier and buyer to supply goods for five years would ordinarily need to be in writing.  Courts want to ensure that if parties are on the hook for contractual obligations over an extended period of time that the agreements are in writing.  However, there is often some dispute over whether a contract can be performed within a year.  Generally, a month-to-month contract that can be cancelled by either party at any time does not need to be in writing, since it is possible that the contract will be completed within a year.  If you think that an agreement may need to be in writing to satisfy this requirement, it pays to talk with a lawyer who can conduct research about your legal issue.

Contracts to Guarantee the Debt of Another

Another time when contracts need to be in writing is when someone acts as a surety of the debt of another.  For instance, if parents agree to cosign a loan or cosign a lease, these types of agreements generally need to be in writing.  The reason for this requirement is that parties may wish to hold a third party liable for the debt of another, and without a written contract, it might be difficult to for courts to know the rights and responsibilities between the parties.  Since contracts routinely require other parties to guarantee the debt of another, this is a common situation when contracts need to be in writing.

Contracts in Consideration of Marriage

Contracts in consideration of marriage also need to be in writing.  The most common situation when this scenario arises is with prenuptial agreements that soon-to-be married people agree to before they are married.  Technically, other types of contracts surrounding marriage are covered by this requirement, but these types of contracts do not come up as often.  In any case, if you have an agreement that involves marriage, it pays to speak with an experienced attorney to ensure that all requirements are satisfied.

There are a few other times when contracts need to be in writing, and different states have different rules about when contracts need to be written down.  There are also a number of exceptions to the requirement that an agreement needs to be written down to be enforceable.  For instance, courts may decide to enforce a contract if the parties operated under it for a period of time.  In these cases, the performance itself demonstrates that there was an agreement such that a writing is not required to evidence that a contract existed.  In addition, under certain circumstances, a confirmation sent after a contract was agreed to is sufficient to satisfy the writing requirement.  Furthermore, if the parties agreed to the manufacturing of specially produced goods, the parties may be held to the agreement in many instances even if there was no signed writing memorializing the agreement.

The Rothman Law Firm has substantial experience negotiating contracts and litigating breach of contract disputes.  We understand all of the issues involved with memorializing contracts in writing.  If you are looking for a New York and New Jersey attorney to negotiate your contract, or litigate a breach of contract dispute, please feel free to contact The Rothman Law Firm to request a free consultation.