Lawyers at times, face resistance from clients when they advise clients to execute written contracts. The general presumption in clients' mind is that the lawyer would suggest a written contract for his commercial reasons.
The truth be said, it can't be more wrong than that!
Generally, law permits oral contracts to be as valid and legal as written ones.
However, oral agreements are generally considered to be less reliable than written contracts – the reasons are manifold. Let us discuss few of them hereunder:
1. Lack of Evidence: First and foremost, oral agreements rely solely on verbal communication and do not leave a tangible paper trail. Without written documentation, it becomes challenging to prove the existence and terms of the agreement between the parties. This lack of evidence can lead to disputes and difficulties in enforcing the agreement.
2. Memory and Interpretation: Human memory is fallible, and people may have different recollections of the details of an oral agreement. Over time, memories can fade or become distorted, leading to disagreements about what was actually agreed upon. Additionally, individuals may interpret the terms differently, leading to conflicting understandings of the agreement.
3. Difficulty in Enforceability: Without a written contract, it can be challenging to enforce an oral agreement if one party fails to fulfill their obligations or if a dispute arises. It becomes a matter of one party's word against the other, making it harder to provide concrete evidence and seek legal remedies.
4. Potential for Misunderstandings: Oral agreements are more susceptible to misunderstandings, miscommunications, and errors. Without clear and precise terms documented in writing, there is a higher likelihood of misinterpreting or forgetting important details, leading to disagreements and conflicts between the parties involved.
5. Complexity of Terms: Some agreements involve complex terms and conditions that are difficult to remember accurately or relay accurately in oral form. Written contracts allow for the inclusion of all necessary details, definitions, and provisions, ensuring that the parties have a shared understanding of the agreement.
6. Lack of Formality: Oral agreements often lack the formalities that come with a written contract. Written contracts often include signature lines, dates, stamping, registration, notarisation, witness and other elements of formality that provide a sense of importance and commitment. This formality helps establish the seriousness of the agreement and can make it easier to enforce.
- Stamping, Registration, Filing requirements. Certain laws require specific instruments to be registered and stamp duty paid thereon. Further, auditors, various authorities and government departments would require agreements to be filed. Absence of a written contract will be an impediment in their review and approval of agreement between the parties.
To sum it up, while oral agreements can still be legally binding in certain circumstances, they are generally considered less reliable than written contracts due to the lack of evidence, potential for memory and interpretation errors, difficulties in enforceability, increased risk of misunderstandings, and the absence of formalities. Written contracts provide a more secure and enforceable framework for documenting and upholding the terms of an agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
