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The importance of creating a written contract

by | Apr 9, 2021 | Business Law

Contracts are a part of everyday business. They come in many different forms and are used for many different reasons, such as an employee contract, independent contractor agreement, lease contract, business to business contract, general construction contract, subcontractor agreement, services agreement, purchase order agreement, operating agreement, etc. These contracts include the material terms that each party must adhere to. Although a verbal agreement may be enforceable, it is always best to put your agreement in writing. A written contract not only confirms the understanding of the parties’ agreement, but is often much more clearly understood. It can serve as the record of what each party originally agreed to.

What are the key benefits of a written contract?

Having a written contract can be important to the type of work you are doing. There are also many benefits to having a written contract. Although many business deals may be a verbal agreement and a handshake, it’s worth it to get that business deal in writing.

It is important to have your contracts in writing

Clarity of the contract: Obligations and payments

It is important that every contract sets forth a clear recitation of the material terms; i.e. the purpose, parties, costs, and obligations. By using precise language in a written contract, each party has a record on what is expected from themselves and the other party involved. This helps prevent misinterpretations and misunderstandings that may arise if one was to solely rely on a verbal contract. Not only should the contract clearly identify the parties and their obligations, but also the payment terms, due dates and amounts. Lastly, having the schedule and/or timeframe expected is important in many business dealings.

Proof of the contract

By having a written contract, you also have proof of what that contract entails. This also may assist in the enforceability of the contract. Proof of a contract may be important if a dispute arises. A person should be able to look back and clearly find what was defined in the contract to show what terms have been completed and what terms have not. In a court of law, an argument supported by written proof, like a contract, is much more concrete than one supported by a verbal agreement and a handshake.

How to handle disputes

Even with a clear written contract, disputes still may arise. By clearly detailing how disputes are to be handled, you likely will save time, money, and other resources. Many people add a clause to enter into mediation and/or arbitration rather than litigation in state or federal court. Litigation can be an expensive and drawn-out process, so many people prefer to avoid having that as the first step in dispute resolution.

What if the proposed contract doesn’t seem fair?

If you are asked to sign a contract but the contract does not seem to fairly represent your interests, you should negotiate more favorable terms. If the other party still refuses to offer a reasonable contract, you may wish to pursue an alternative person with whom to do business.


It is always a good idea to have an attorney review your contract before you sign it. A good contract attorney can tell you if the terms are reasonable and comply with state and federal laws. If there are issues with the contract, an attorney also can help you negotiate aspects of the deal to provide a fair contract between the parties.

A knowledgeable contract lawyer can help you

There are many benefits to having a written contract over a verbal agreement. A contract attorney can help you draft and negotiate your contract so that it is fair for all parties. McDonald & Kloth, LLC has helped businesses, contractors, and employees in their contract negotiations. Call our attorneys at 262-252-9122.