Do you have a clear contract with each of your clients? Do you solely use verbal agreements and rely on the word of your co-contractor for your business? If your answer is yes, it is good to know that although the verbal contract is legally sufficient to be the basis of your claim, it is often not enough to adequately protect you.

In certain cases, written contracts, because of their formality and costs when compared with verbal agreements, may indeed seem useless when both parties are satisfied with the given terms and benefits. Moreover, when negotiating, it might seem inappropriate to talk about grounds for a termination of contract or interest rates in the event of a default of payment, especially when both parties trust each other. However, it is when one of these parties becomes dissatisfied that the contract, especially when written, becomes critical.

The contract is legally binding regardless of the form it takes, subject to special requirements prescribed by law. In other words, the verbal agreement has the same legal force as a written one. However, the verbal agreement, to be used as evidence, must necessarily be proven. But does one prove each and every clause of the contract when no written evidence exists to support it? In many cases, the set of clauses found in a written contract are not even addressed in an verbal agreement.

From a strictly legal point of view, we must also pay attention to the rules of evidence that can apply in a court of law. In the event that a dispute should arise, it is not always possible to prove a contract is valid through testimonial evidence. Particularly when the amount of the dispute exceeds $1,500. Fortunately, various elements can support the testimony, such as an admission from the opposing party, or when the contract was drafted in the course of business.

In short, it must be stated that a clearly written contract is often preferable to an approximate and verbal agreement. If all of your rights and obligations are stated on the contract, it will be much harder for your co-contractor to hold you responsible for any breach of contract. Although written clauses can sometimes be subject to interpretation, they will still be easier to defend in comparison with issues concerning the proof of a discussion that took place more often than not, several months earlier.