“Did you get it in writing?” This expression is so often used that many people think it is the law. The reality is that oral contracts are just as valid under the law as written contracts.
Many companies use oral contracts with their customers to make the business relationship seem more personal. Oral contracts send a message to the customer that “we value you and value your word; we trust you enough that our company won’t require you to sign a bunch of paperwork.” Unfortunately, the simplicity of oral contracts often leads to worse relationships with customers when there is a disagreement.
Title 15, of the Oklahoma Statutes, at Section 134 states: “[a]ll contracts may be oral, except such as are specially required by statute to be in writing.” Although, not every state has a similar statute, oral contracts are just as valid in other states as well.
Having said that, one should always get agreements in writing. Even today, a substantial amount of commerce is done by oral agreement, especially among small businesses. Oral contracts are fine as long as everyone is performing as they said they would. Where the problem comes in is where someone doesn’t live up to their end of the bargain.
When there is no written contract, business disputes soon become a my-word versus your-word affair. There is often no proof of whose word is right. Memories are faulty. Plus, even a small amount of negotiation on terms can quickly blur exactly what was agreed to.
The problem with oral contracts is not their validity, it is their enforcement. As soon as there is a disagreement, enforcing an oral contract becomes an issue.
Putting your contracts into writing eliminates the majority of the risk and places your company in a much stronger position if there is a dispute down the road.
More importantly, having terms in writing can prevent an issue from escalating into something that ruins a relationship with your customer. Pointing to the written terms allows your customer to see that you aren’t going back on your word or trying to take advantage of them.
It is fairly easy to dispute what was said between two parties a year ago. It is much harder to dispute that you agreed to terms on a document that you signed.
Having your customers sign a written contract may not seem as personal on the front end. However, showing your customers that you stick to your word will help nurture long-lasting relationships.