Written Contracts: Everything You Need to Know
Written contracts, much as the name implies, are agreements between two or more individuals or parties that have been either handwritten, typed, or printed, and then signed by all of the involved parties.4 min read
2. Statute of Limitations
3. All Parties Agree
4. The Importance of Business Contracts
Written contracts, much as the name implies, are agreements between two or more individuals or parties that have been either handwritten, typed, or printed, and then signed by all of the involved parties. While a contract does not have to be written (they can also be oral), written contracts are easier to enforce; in some instances, a contract must be written in order for it to be considered valid. As this can vary from one state to the next, it is important that you check the laws in your particular jurisdiction to ensure you are clear as to whether or not your contracts must be written.
Typically, the parameters of a written contract are that one party provides a particular good or service, and in return, the other party provides an agreed-upon payment.
When Written Contracts Become Bad Debts
Always make sure you are in full understanding and agreement to the terms and conditions of a contract before you sign it, because once your signature is on that document, you are considered legally obligated to abide by the terms of said contract. Failure to do so would be considered a breach of contract, upon which time the other party or parties can potentially take legal action against you.
If you are in breach of contract and the non-breaching party does decide to pursue legal action, you may very well find yourself in a position where a judgment is entered against you (assuming that the courts find in favor of the non-breaching party) requiring you to pay any amount that is owed. Should you fail to do so, the non-breaching party can then take further legal action against you, to have your wages garnished until such time as the debt is paid. With that said, the courts can only force you to pay up provided the statute of limitations has not yet expired.
Statute of Limitations
So, how do you know whether the statute of limitations have expired and whether or not you have the right to take legal action, or if you could potentially have legal action taken against you? Simply put, whatever day was the last day of activity is when you are going to be on the hook. That last day of activity could be the day you agreed to the terms of a payment arrangement, the last day you made a payment or performed another activity; it can even be the day that you acknowledged that you are still obligated to provide payment. Depending upon the type of debt you owe, it can affect the statute of limitations:
- Open-ended account
- Promissory note
- Oral agreement
- Written contract
Knowing the type of debt you have helps you understand what the statute of limitations are in your state. Should you find yourself on the receiving end of a lawsuit from someone trying to collect a debt, you may want to consult with an attorney to ensure you fully know your rights in the situation. By understanding the type of debt you have accrued, the proper statute of limitations, and your own rights, it can ensure you do not take action which could potentially restart the clock, thus extending the statute of limitations.
All Parties Agree
It may seem quite obvious, but the biggest sticking point in ensuring that a contract is considered valid and therefore, legally enforceable, is that all parties involved be in full agreement as to the terms and conditions. This serves as a good example as to why it is best to have contracts drawn up in writing, and signed by all involved parties, as the terms and conditions are there, in black and white. Particularly in cases of there being negotiations or revisions, having the contract in writing can help alleviate confusion or misunderstanding, down the road.
By having everything in writing, it also provides clarity in the event that one party wishes to revoke the contract, as a follow-up document can be provided indicating that. Additionally, if there is an expiration date associated with the offer, that can be included in the written contract, so all parties know by when they must accept the contract.
The Importance of Business Contracts
It’s never a bad idea to have a written contract, but it can spare all parties involved a lot of potential confusion, misunderstanding and headaches, down the road, in the business world. Additionally, it can save all parties the hassle of litigation, as ideally, having the written contract can serve as enough evidence of the agreement to keep everyone upholding their end of the deal.
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