While many states accept and enforce a verbal agreement, it is very difficult to "prove" that such agreements exist and the terms that were agreed upon, especially when there is a dispute between the parties. In order to protect yourself in cases of dispute or breach of contract it is best to get it in writing, and in some cases it is required by law. For example all real estate transactions have to be in writing, and so do the sales of items that are valued over $500, and any contract that expands over more than one year.
What Laws are Applicable to Contracts?
Contracts are governed by two sets of laws. The first is Common Law, and the second is the Uniform Commercial Code. What you need to know about Common Law when drafting your contract is that if a dispute arises, or if the contract is breached and goes to court, a judge will pass judgement about the contract based on past rulings in similar cases. They will also interpret the contract’s wording how an average person reading the contract would interpret it. This makes clear and concise wording of your contract vitally important to the contract’s legal enforcement. Try to avoid confusing wording such as bi-monthly payments, as this can be interpreted as either one payment every other month, or two payments each month.
The Uniform Commercial Code is another body of laws that influence how contracts are drafted and enforced. The most important aspect of the UCC that the average person needs to understand is the good faith clause. This clause requires both parties to enter into the agreement in good faith. This means that the contract is drafted with both parties intending to be fair, honest, and intending to meet the agreed upon terms. The other terms set out in the UCC act as guidelines for commercial trade, and if you are not sure if these terms will impact your contract, then you should download a copy of this code or talk with your legal advisor.