Isabella Carter
A written agreement is a legally binding document that establishes a formal association between two or more parties to achieve a particular aim. It is a printed document that details the rights and obligations of the involved parties, and it is more enforceable than an oral agreement. Written agreements are often used to protect the terms of an agreement and can include various clauses such as confidentiality, indemnification, severability, and dispute resolution. These contracts are usually customized to meet specific needs and circumstances and must be appropriately formatted, concise, and written in a professional tone.
| Characteristics | Values |
|---|---|
| Purpose | To define the terms and conditions of a business agreement |
| Legality | Legally binding |
| Enforceability | More enforceable than an oral agreement |
| Parties | Minimum of two parties, one lender and one borrower |
| Signature | Must be signed by all parties to be valid |
| Content | Clear, concise, formal, and easily understandable |
| Clauses | Confidentiality, indemnification, severability, dispute resolution, termination |
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What You'll Learn
Legality and enforceability
The enforceability of a written contract is established once it is signed. If a party defaults on the payment terms described in the contract, the other party can pursue legal action to demand payment. This could include filing a lawsuit to collect the remaining balance. If the court finds a judgment against the payee, the contracting party could file for wage garnishment or other methods to ensure the repayment of the debt.
The legality of a written contract is ensured through specific clauses that outline the rights and obligations of each party. For example, a confidentiality clause can bind both parties to secrecy regarding confidential information or trade secrets. An indemnification clause holds a person or company harmless in the event of a dispute, loss, damage, or burden, transferring liability between parties. A dispute resolution clause defines how parties should resolve disputes, saving time and money by avoiding the need for a lawsuit. A termination clause details the conditions for ending a contract, including provisions for payment and liability.
To be legally binding, a written contract must contain four key elements: mutual assent, where all parties agree to the terms; signatures from all parties; specific details about the agreement; and a clear outline of the duties and responsibilities of each party. While oral contracts are enforceable in court, written contracts are considered more reliable and enforceable as they provide a concrete record of the agreement.
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Statute of fraud laws
The statute of frauds is a law that requires certain types of contracts to be in writing and signed by the concerned parties to be considered valid and enforceable. The law was enacted to prevent misunderstandings, fraud, and perjury, which were common in the 17th-century English legal system due to a lack of written evidence. The statute of frauds, also known as the "Act for Prevention of Frauds and Perjuries", was passed in England in 1677 and later in Ireland in 1695.
The statute of frauds applies to contracts involving large sums of money, the sale of land, and certain business transactions. For example, a contract to convey land must be in writing and signed by the party against whom the contract is to be enforced. Similarly, the Uniform Commercial Code (UCC) in the U.S. provides a standardized set of business laws that regulate financial contracts, and every state has adopted it except Louisiana, which has only partially adopted it.
The statute of frauds also covers contract modifications. For instance, an oral agreement for a nine-month car lease may be modified after the lessor takes possession of the car. In such cases, the statute of frauds requires a written and signed agreement to enforce the modified terms. The statute of frauds also applies to certain types of verbal contracts, making them non-binding and unenforceable without written evidence.
While the statute of frauds provides protection against fraud and perjury, it is important to note that not every written document is protected under it. Both parties must sign the agreement for it to be enforceable, and there are specific requirements for written correspondence and objection procedures. Additionally, a contract may be deemed invalid if a mistake made by one party at the time of contracting leads to a material effect on the agreed exchange.
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Contract termination
A contract is a legally binding document that ties two or more parties to an agreed set of terms and conditions. It establishes each party's obligations and acts as the groundwork for a business relationship. However, circumstances may change, and parties may wish to terminate the contract.
Other reasons for contract termination include the parties not receiving value from the contract or finding it difficult to work together. In such cases, all parties must mutually agree to terminate the contract.
To terminate a contract, a written notice is usually required. This notice should detail the reason for termination, including any breach of contract, and reference the relevant section of the contract. The original contract may specify how the notice must be given and to whom, and this should be followed to ensure the contract is terminated correctly. The notice should also include the date of the intended end of the working relationship.
To protect your business, keep copies of all communications involving the contract termination, including any written confirmation from the other party. This avoids any potential disputes regarding the dates of these critical communications.
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Confidentiality and NDAs
Confidential information is often a company's most valuable asset. Confidentiality agreements and NDAs are both legal contracts among two or more parties that specify the criteria for maintaining the confidentiality of certain information. They are used to prevent the unauthorised disclosure of information and to protect trade secrets, client lists, and financial data.
NDAs are often used in business and legal settings, while confidentiality agreements are typically used in employment or personal situations. However, confidentiality agreements are also used when entering a co-marketing relationship or a strategic alliance with a complementary website operator.
NDAs are legally binding agreements to keep information confidential. They are also known as confidentiality agreements (CAs), confidential disclosure agreements (CDAs), and proprietary information agreements (PIAs). Once an NDA is signed, parties who have agreed to it cannot discuss any information the agreement covers with a non-authorised party.
There are two types of NDAs: unilateral and mutual. In a unilateral NDA, only one party has confidential information to protect and only one party agrees to keep it confidential. In a mutual NDA, both or all parties have confidential information, and all parties agree to keep it confidential.
A well-written NDA will clearly delineate which information is protected and explicitly spell out the consequences of breaking the NDA.
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Dispute resolution
When drafting a dispute resolution clause, it is essential to consider the specific nature of the agreement and the potential areas of conflict. The clause should establish a clear and mutually agreed-upon process for handling disputes, ensuring that all parties understand their rights and obligations. This process can include mediation, arbitration, or a combination of both.
Mediation involves the appointment of an impartial third party, known as a mediator, who facilitates negotiations between the disputing parties. The mediator assists in identifying the issues, exploring solutions, and reaching a voluntary agreement acceptable to all involved. Mediation is a confidential and flexible process that allows parties to maintain control over the outcome, fostering a collaborative resolution.
Arbitration, on the other hand, involves submitting the dispute to an arbitrator or arbitral tribunal, who acts as a private judge. The arbitrator reviews the evidence and arguments presented by each party and renders a binding decision, known as an award. Arbitration is often faster and more cost-effective than litigation, providing a final and enforceable resolution.
In some cases, a written agreement may incorporate a multi-step dispute resolution process, starting with mediation and progressing to arbitration or litigation if mediation fails to achieve a resolution. This approach offers a balanced blend of collaborative and decisive mechanisms, allowing for flexibility and the potential for early settlement while providing a pathway to a final decision if necessary.
To ensure the effectiveness of dispute resolution clauses, it is crucial to address key considerations. These include the selection of impartial and qualified mediators or arbitrators, the establishment of fair procedures, the protection of confidential information, and the enforcement of any decisions or awards. By carefully crafting the dispute resolution clause and selecting the appropriate dispute resolution process, parties can efficiently manage conflicts, minimize disruptions, and preserve their relationship.
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Frequently asked questions
A written agreement is a printed document that details what parties can or cannot do. It is a legally binding contract that is more enforceable than an oral agreement.
Written agreements are beneficial as they ensure that the interests and obligations of all parties are protected and enforceable. They also provide a reference point in the event of a dispute, as well as a clear outline of the solutions or repercussions if someone breaks the agreement.
A written agreement should include an introductory section that lists and defines all parties involved. It should also cover its duration and the specific terms of the agreement, including any technical or proprietary information. Additional clauses can be included, such as confidentiality, indemnification, severability, and dispute resolution clauses.
