Courts are crowded with lawsuits filed by people who entered into oral agreements with one another and later disagreed over what was said. Costly misunderstandings can develop if an IC performs services for you without a writing clearly stating what he or she is supposed to do and what will happen if it isn’t done. Such misunderstandings may be innocent; you and the IC may have simply misinterpreted one another. Or they may be purposeful; without a writing to contradict him or her, an IC can claim that you orally agreed to anything.
Some Agreements Must Be in Writing
Some types of agreements must be in writing to be legally enforceable. Each state has a law, usually called the Statute of Frauds, listing the types of contracts that must be in writing to be valid.
A typical list includes:
- Any contract that cannot possibly be performed in less than one year. Example: John agrees to perform consulting services for Acme Corp. for the next two years for $2,000 per month. Since the agreement cannot be performed in less than one year, it must be in writing to be legally enforceable.
- Contracts for the sale of goods—that is, tangible personal property such as a computer or car—worth $500 or more.
- A promise to pay someone else’s debt. For example, the president of a corporation personally guarantees to pay for the services you sell the corporation. The guarantee must be in writing to be legally enforceable.
- Contracts involving either the sale of real estate or real estate leases lasting more than one year.
- Any transfer of copyright ownership must also be in writing to be valid.