News & Publication

22-05-19 Why you need Clarity and Certainty in Contracts

There are many different forms of contract from employment contracts, to the supply of goods and services in business or a simple purchase in a shop, right up to buying or leasing a house.

 

In law, a contract will come into existence when there are certain things present:

 

 

1.      A valid offer

2.      Acceptance of that offer

3.      An intention on the part of both parties to create legal relations

4.      Consideration (payment) or value, given from one party to the other

 

 

 

 

Verbal vs Written Contracts

A contract can be verbal, unless the law requires that it be in writing, such as for the sale or transfer of an interest in land which also has to be signed by both parties. However by law, not all contracts need to be in writing and the level of formality varies, often depending on the value of that contract.

 

So should a contract be in writing even though it is not required to be? The short answer is ‘yes!’

 

Clarity and certainty as to what has been agreed is most important and while no written contract can provide for every eventuality, it can generally deal with the issues that most commonly come up when there is a query.

 

Contract Disputes

We often see disputes where, due to lack of formalities, it is unclear as to:

·  what was/is to be done

·  by when it was/has to be done

·  what was to happen when/if there are delays

·  what is to happen when what is done is not what was agreed

·  the standard to which any particular task was to be done or the materials used

Talking things over with a solicitor will lead to him/her asking you a variety of questions and getting answers that will form the basis of a good quality written contract.

We regularly prepare leases/licences for the occupation of properties – looking at them from both the perspective of the landlord and also the tenant.

Similarly, we advise on partnership agreements by getting our clients to think about their aims/objectives/rights/obligations and just as importantly at what point he/she may want an exit route from that partnership.

 

The Courts Decide

It is not simply about what the obligations of both parties are in any given situation, a contract can provide a mechanism for both parties to deal with any difficulties that arise. It can help get the matter resolved – always remembering that the jurisdiction of the courts cannot be excluded.

 

When things go wrong, as they often do, if the parties cannot resolve the matter, the court is asked to determine what the terms of the agreement were.

 

If the agreement is in writing, the question for the court, should it need to go that far, is a little easier as matters can be decided against the background of the written agreement by interpreting its provisions.

 

Ultimately it is an exercise in cost/benefit analysis, should you spend your money up front on getting a professional to document the terms of the contract? By doing so you could possibly avoid a larger expense at a later date when things may go wrong or the matter ends up in court.

 

The motto should not be: a stitch in time saves nine - it is better to go and see a professional in advance so that they can advise you, thus avoiding costly mistakes in the future.

 

For further information about our contract writing services please contact Punam Deepak,

pd@da-solicitors.com

 


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