Verbal Agreements

Subject: Verbal Agreements
From: Andrew Plato <gilliankitty -at- yahoo -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Mon, 21 Oct 2002 15:01:48 -0700 (PDT)

--- David Neeley <dbneeley -at- yahoo -dot- com> wrote:
> Mr. Plato opined:
> "There is no such thing as a legally biding
> 'verbal-agreement.'"
> Wrong.
> So long as the subject does not fall under the aegis
> of the "Statute of Frauds" as interpreted in the
> relevant jurisdiction, there are many situations in
> which verbal agreements are binding.
> As an example, suppose you had a "handshake" deal with
> someone to do some work for you in an amount not above
> the minimum for the afore-mentioned Statute of Frauds
> (which, as a purely frivolous aside, is not in itself
> a "statute" but a part of common law), and in its
> other details falls outside of that august rule. If
> you are receiving the benefit of the work, and if you
> know the work is being done according to the other
> party's understanding of your agreement, then if you
> remain silent believing like Andrew that "a verbal
> agreement isnn't worth the paper it's printed
> on!"--you may well be surprised to find that the
> courts often and routinely will find against you and
> make you pay.

All the party needs to do is deny that they ever made the agreement. Or make up a
new provision - that you failed to meet. Then it becomes your word against

While you are correct that a court may side with you or feel sympathy with you
and award you the case that doesn't mean the agreement was "legally binding." It
just means you were able to convince a judge to side with you.

You still will have to haul this person to court (which costs $$$). Moreover, a
court judgment does not mean you will actually collect. The person could just
flee or declare bankruptcy and you're SOL either way.

Whether an agreement is "legally binding" or not is almost irrelevant. The
purpose of an agreement is to avoid litigation. All the more reason to get it
down on paper.

> I won't get into the various times email may indeed be
> admissible in court. All you need do is remember some
> of the details in the Microsoft antitrust case where
> email messages were used on many occasions--much to
> Microsoft's embarrassment!

And many of which were utter fabrications or discussions taken out of context.
All you heard was the popular stuff that was printed in the paper. You did not
hear about the billions of emails that were of a general business nature. Which
is all the more reason to be careful with email. It can actually come back to
haunt you when people pull quotes out of context and fabricate intention based on
partial information.

> In general, though, the primary point that you should
> get a formal contract signed by your employing party
> is a sound one. Likewise, when a client instructs you
> to make changes that are beyond the scope of the
> original agreement, you should get change orders from
> him/her/it. This serves several purposes, including
> helping assure you and your client are "on the same
> page" (which use is the origin of the term, I think!)
> and helping you have an easier time of it should you
> ever have to sue over unpaid fees.

In general, if you have to sue somebody, something has gone very wrong. Usually
it is miscommunication. However, it can also be the result of just bad business
people who go out and buy things they can't afford. Nevertheless, lawsuits should
always be an absolute last resort.

All of this boils down to good business practices. A reputable business person
will, as you and Bruce pointed out, welcome a written contract as it shows a
certain diligence on your part. Generally, hand-shake deals are the kind of deals
where people get burned. And we all know that.

Remember, just because you're right, doesn't mean you win. When it comes to legal
matters you can be 100% right, correct, and legal - and still get NOTHING.

Andrew Plato

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Re: techwr-l digest: October 20, 2002: From: David Neeley

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