Every day people enter verbal agreements. They often do so without awareness of the risks involved. Commercial reality can make it expensive or inconvenient to have lawyers review every agreement. Even when agreements are written, it is not uncommon for people to overlook the fine print and be unpleasantly surprised.

A vast quantity of cases ends up in our court system because parties have not been diligent and did not draft agreements that work in their favour or cover all anticipated outcomes. Conflicts arise because some terms are unwritten and the full expectations of parties are not codified. It is always best to be thorough. It is always better to draft terms for all of one’s expectations rather than leaving agreements open to interpretation.

To make a valid contract, people should be aware of the following. Firstly, contracts should be in writing; they should contain what is being offered and the conditions of acceptance. Secondly, contracts should be signed by parties in the presence of witnesses. Thirdly, contracts should be accompanied by consideration – that is to say, a benefit must be exchanged by the parties in addition to the signing of the agreement. Lastly, parties should have independent legal representation so that claims of duress, undue influence or unconscionability can be circumvented.

Agreements entered with friends and relatives can benefit from the formal conditions referred to above. This is because people’s expectations can change over time and disputes over agreements can destroy relationships. In some ways, it is careless to enter agreements with people close to you without respecting the formal conditions above.

Human nature being what it is, however, people will continue to enter informal agreements as they have since time immemorial. They will continue to be disappointed by expectations and will the need for lawyers to navigate their disputes remains.

The information contained herein is not intended to be legal advice.