What Are Three Methods of Contractual Agreement
As a business owner, it`s essential to have a well-drafted contract in place before engaging in any business dealings. A contract is a legally binding agreement between two parties that outlines the terms and conditions of their business relationship. In this article, we`ll discuss three common methods of contractual agreements- oral, written, and implied.
Oral contracts, also known as verbal contracts, are the simplest form of a contract. They are formed through a verbal agreement between two parties. Oral contracts are legally binding, but they are also the most challenging contracts to enforce. This is because oral contracts are not typically documented, and it`s challenging to establish the terms of the agreement.
Written contracts are the most common form of contracts. They are written documents that outline the terms and conditions of the agreement. Written contracts include all the essential details of the agreement, like payment terms, delivery dates, and responsibilities of the parties involved. The written contract is signed by both parties, and it serves as an official record of the agreement. A well-drafted written contract provides clarity and transparency to the parties involved and helps to avoid any future misunderstandings.
Implied contracts are formed when two parties conduct business without explicitly agreeing to a contract. Implied contracts are created when the parties involved behave in a way that suggests the existence of an agreement. For example, if you hire a contractor to complete a project, and they start working without discussing payment, an implied contract is created. The party providing the service will expect payment, and the party receiving the service would expect to pay them. Implied contracts can be legally binding, but they are tricky to enforce because the terms and conditions of the agreement are not explicitly stated.
In conclusion, there are three main methods of contractual agreements – oral, written, and implied. Each method has its advantages and disadvantages, and it`s essential to choose the right method based on the nature of your business relationship. Written contracts are the most reliable and secure way to protect your business interests. However, if you`re in a situation where a written contract isn`t possible, an oral or implied contract may be your best option. As always, it`s best to consult with an experienced attorney to help you draft a contract that meets your business needs.