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"But it's not in writing...."


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10/31/2009
Dan Brendtro
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 "But it's not in writing!"  It's a myth that everyone seems to have heard before:  a contract is no good if you don't have it on paper.

The good news:  this myth isn't true.  A contract is an agreement, not a document.  Some contracts are oral, and some are written.  Some are signed, and some are back-and-forth emails.  Some are never discussed, but are just "implied" or "assumed", based on how the parties acted.

And sometimes, there are two contracts at issue:  the written contract, and the oral agreement reached before everything was written down.  In law, the oral agreement reached before the written contract is called the "parol agreement".  (For history and language buffs, the word 'parol' originated in the context of the promises a war prisoner would make prior to being released from captivity, and, literally meant, "giving your word".)

The idea works the same way in the law, as well.  If someone gives their verbal "word", a court can enforce those promises in the same way as a written contract.  And if the written agreement doesn't explain exactly what the parties intended, a court can look at the prior negotiations and agreements.

An opinion issued this week briefly discussed parol agreements, and restated the rule that, usually, a written agreement replaces an oral agreement.  See, Kjerstad Realty v. Bootjack Ranch.  The case involved a dispute between a realtor, demanding a commission, and the property seller, who refused to pay the commission (because the ranch was sold to a neighbor to whom the realtor didn't actually "show" the property).  The case was sent back for a jury trial.

In general, it is better to have written agreements.  Often, however, we take each other's "word", instead.  And the law will treat those promises the same as if they are written down.  So if you hear someone say the magic phrase, "But it's not in writing", tell them the good news:  it doesn't have to be.   
 

Category: Business Litigation


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