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Get it in Writing - Always use a Written Contract

By Lane V. Erickson, Idaho Business Law Attorney

At the Racine law office, we have assisted business owners in both the creation and operation of their businesses in Idaho for more than 70 years. We have been with many Idaho business owners from the very beginning of the operation of their business. We have helped with the transitioning of business operations from parents to children, or from one partner to another. We have also helped in the negotiation and creation of contracts and other business deals four our clients. We are confident that we have the skill and the ability to help you.

Our team of Idaho business attorneys include partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Each of our attorneys as skilled and experienced with business transactions and in helping our business clients especially when it comes to creating, preparing and/or reviewing business contracts.

The purpose of this article is to discuss the importance of always getting your business contracts in writing. To do this we will talk about oral contracts and we'll discuss why written contracts are a better way to protect yourself and your business. Finally, we will talk about how you can avoid problems that can arise from conflicting documents that may exist as a result of your contract negotiations.

Are Oral Contracts Valid?

The first place to start is to talk about oral contracts. I often have my business clients ask me if an oral contract is valid and enforceable in Idaho. The short answer is yes. To be sure, there are some specific contracts that Idaho law requires to be in writing. We will discuss those types of contracts in a later article but just know that there are some that exist. Even if this wasn't the law in Idaho we almost always suggest that our clients get a written contract rather than having an oral one. The reason for this is simple.

While oral contracts are valid in Idaho they are often difficult to prove when the parties don't agree on what the terms and conditions of the contract actually are. This most often comes to light when there is a disagreement about how a party is to perform under the terms and conditions of an oral contract. For instance, if you owned a business that drilled water wells for individuals on their land, and you entered into a contract with an individual to drill a well on his land you will need to know the details of both where that well will be placed and how deep you will be drilling the well. You will also need to discuss the actual price that will be paid for the drilling of the well.

Let's suppose that you follow the oral instructions you are given from the other party and you go to the location and you drill the depth of the well that was discussed. You then provide a bill for your services to the other party. Now let's suppose that the other party doesn't like the work that you've done or decides they don't want to pay for it completely. Let's say that they argue that the agreement was that they would pay $10,000 less than what you believe they owe. In this instance there's now a problem that could arise because of there not being a written contract.

To prove the terms and conditions of the contract, both you and the other party would be able to testify about what the terms of the contract are. Additionally, you'd be able to call additional witnesses who may have been present when you were discussing the contract with the other party. Finally, you may also be able to put emails, text messages, or other documents in as evidence concerning what the terms and conditions of the contract were.

Even with all of this there could still be a disagreement about what the terms of the contract were. If there isn't ample proof it's possible that the contract would not be enforceable or would not be enforceable in the way that you believe it should be. In most instances all of this can be avoided by simply having a written contract.

Why a Written Contract is Better?

This is not to say that having a written contract will help you avoid all of your problems but it will help you avoid most of them. A written contract gives you the ability to be specific about the terms and conditions of the contract such as location, price and timing. This is important because it can help you avoid any misunderstandings or a claim by the other party that there was a misunderstanding about what the contract was actually requiring each party to do.

Additionally, a written contract gives you the ability to be specific about where jurisdiction for the performance of the contract exists. This is important because if a dispute arises the jurisdiction that is stated in the written contract is where the dispute will be resolved. In addition to this, the written contract gives you the ability to be specific about which state’s laws will apply to the contract. Because the laws of each state may be a little different this could have a huge impact on your ability to require performance of the contract in a way that will benefit you the most.

Attorney fees is also another important area of contract law that can be covered through your written contract. If you stated in your written contract that if a dispute arises and the prevailing party will receive their attorneys fees, Idaho law will support that contract term and will require the party that does not prevail in the contract dispute to pay the attorney’s fees and costs of the prevailing party.

How to Avoid Conflicting Documents

The final tip that we can provide you in this article has to do with how you can use a written contract to avoid having the other party bring in additional evidence in that conflicts with the terms of the written contract. In other words, sometimes a party will have buyer's remorse about the contract they signed. They may attempt to bring other evidence in that says that there were additional terms or conditions of the contract that aren't in the written contract itself. This can all be avoided if you use an integration clause.

An integration clause is simply a sentence in your written contract that says that the parties are required to stay within the four corners of the written document itself and use no additional documents as part of the contract. Again, this keeps the other party from using other emails or other text messages or other drafts of documents that went back and forth during the negotiation process.

It's impossible to provide detail about all of the reasons that using a written contract is important as part of your basic business operation. We have assisted numerous business clients in creating and reviewing written contracts. We are confident that we can help you too.

Enlist an Idaho Estate Planning Attorney to Help You

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Pocatello 83201. We will answer your questions and help you solve your Idaho business law needs.

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