A written contract is an agreement made on a printed document that has been signed by both the lender and the borrower. Written contracts are legally binding and easier to enforce than oral contracts. A written contract generally refers to a written document outlining an agreement between two parties. The parties can be individuals, businesses, or organizations. All factors or portions in
the agreement must be included in the agreement, and each party involved has to sign the document in order for it to be considered valid.
In many cases, a written contract is typed and submitted by a licensed attorney. This doesn‘t have to be the case, as simple contracts can be written by the individuals involved. To ensure their validity, contracts written in this way should be approved by an attorney. Most simple written agreements will hold up in a court of law, but it is a good idea to double check. The purpose of the written contract is generally to ensure that both parties fully understand the agreement and are committed to complying to its stipulations. Contracts may between a buyer and a seller or a product, between someone hiring the other person to complete a specific job, or
between two parties who are undergoing a business venture together. When each individual or business signs the contract, he or she is acknowledging than an agreement was made and that he or she understands the responsibilities involved.
Written contracts provide more certainty for both parties than verbal contracts. They clearly set out the details of what was agreed. Matters such as materials, timeframes, payments and a procedure to follow in the event of a dispute, can all be set out in a contract.
A written contract helps to minimize risks as it is much safer to have something in writing than to rely on someone’s word. A written contract will give you more certainty and minimize your business risks by making the agreement clear from the outset.
Benefits of a written contract
A written contract can:
- Provide proof of what was agreed between you and the hirer
- Help to prevent misunderstandings or disputes by making the agreement clear from the outset
- Give you security and peace of mind by knowing you have work, for how long and what you will be paid
- Clarify your status as an independent contractor by stating that the contract is a ‘services contract’ and not an ’employment contract’. This will not override a ‘sham’ contract, but a court will take the statement into account if there is any uncertainty about the nature of the relationship reduce the risk of a dispute by detailing payments, timeframes and work be performed under the contract
- Set out how a dispute over payments or performance will be resolved
- Set out how the contract can be varied
- Serve as a record of what was agreed
- Specify how either party can end the contract before the work is completed.
