Business Contracts: Which Need to Be in Writing and Which May be Oral



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The need for business contract is obvious to anyone that works in the commercial world. These may be used for a variety of reasons, but some of the most important are to avoid risk of liability and to prevent possible conflict.

Business partners or co-workers often feel the need to ensure certain job duties are separated, funds have been recorded and skills are understood so that each contributing person has an clear knowledge of what has been provided to the company. For those that decide to create ventures, working with other organizations often bears financial fruit when the right contracts are used as a beneficial means of assisting both corporations.

Business contracts used for assisting the owner or partners are usually in writing with a business lawyer used to ensure they are valid and legitimate. Some of these contracts are oral with only the binding of legality left to the words spoken and agreed upon by all involved. These should have witnesses and written forms to ensure they may be enforceable. Without witnesses, it is only one person’s word against the other’s word. However, if one witness is a lawyer, the words may be legally binding with an additional written contract drafted after or during the meeting with the partner, co-owner or person from another organization.

Oral Contracts

Some oral contracts may bind the speaker into an agreement based on his or her words. While this is not best used in business dealings, they may be effective and useful in employment and individual bargains. As long as there are witnesses available to ensure the contract is enforceable, an oral contract may ensure that certain terms are offered and accepted by the two parties involved. Because business transactions and ventures are so complex, an oral agreement is not best. There are many alterations needed to certain contracts between companies, partners or other business associates. This leads to complications later when attempting to hold one or multiple persons to the original deal.

Written Business Contracts

To ensure clauses and terms are understood, known and clear, it is important to ensure a business contract is in writing. A drafted document is necessary to provide the best means of enforcing the details. Additionally, these files should be analyzed by a business lawyer to ensure the information within is valid, applies to the situation, clear and concise and beneficial for those it affects. Without these in the contract, it is possible to seek action or make decisions in opposition of what is wanted or necessary for the company based on the wording and meaning of the terms outlined.

The use of drafting the contractual agreement often saves time. There are many business transactions that are assisted greatly through the use of an agreement signed and utilized by the company for the various needs to continue if there are complications that arise. These are most often found in owner agreements, conditions of sale, operations of the business, nondisclosure and intellectual property agreements and similar documents. Some are used to ensure if a conflict arises within the organization that the usual daily practices continue no matter how much of a deadlock shareholders or partners may be in based on the subject. Others ensure there are stipulations for the possibility of a partner dying or leaving the company. Certain employee contracts provide for trade secrets, certain processes and keeping workers from poaching clients away from the business.

Business Contracts

Owner agreements are often the backbone supporting a company in case of disagreements and conflict. These may include buy-sell options, how to avoid a deadlock, and what operations should occur by which party. Some contracts regard the dealing of relationships such as with suppliers, distributing organizations, employees and even product manufacturers. These associations are vital to transactions within the business, and they must be retained as long as the relationship is necessary for revenue. Intellectual property is also affected by contracts in order to ensure there is an IP address, trademark, trade secrets, patent or copyright available and in use to protect the property. Providing access to confidential material should be closely monitored and kept safe.

No matter if the contract is drafted into a document or orally bound by the spoken terms, a business lawyer is essential during any agreement is in place. He or she may also ensure the terms and conditions of sale are appropriate, content online is legal and not violating any regulations as well as other legal duties necessary for valid business practices.


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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
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