In business litigation, one of the biggest areas of dispute that Judges are called upon to resolve pertains to making a finding as to what are the terms and conditions of the actual agreement between parties. Many individuals, including those who own or operate a business, believe that a handshake or oral promise will suffice; but many such individuals learn too late that this is not the case.
Individuals and companies need to have written agreements in place which clearly set forth the understanding of the parties. Such agreement needs to clearly set forth the written obligations of each of the parties, in other words, what each of the parties are to do and perform. This may mean that one party is to pay money and the other provides a service, or it could mean each of the parties are to exchange product or a combination of the two.
A business should protect itself by having some standard agreements developed, not taken off the internet, but drafted for the specific business to address such businesses specific needs. These agreements should include those with vendors, customers and with employees. By doing so, this will help avoid legal problems in the future.
Individuals, whether they are close friends, relatives or strangers, should always make sure agreements are in writing. I would specifically encourage agreements between relatives who are involved in business together, as an agreement will avoid potential conflicts which could tear a family apart. Such agreements include those relating to work around the house, for repairs, purchasing and selling of assets, lending money and/or investing in a business. It is important to have such agreements in writing.
Having a written agreement can help avoid costly litigation. If litigation occurs, the agreement can include provisions for payment of legal fees and expenses, and also for the limitation of liability. There are form contracts that are sold online or in various stores, but I would urge that all such contracts be reviewed by an attorney to make sure they meet the intended purpose.
Robert B. Rosenstein is a business and estate planning attorney with over 35 years of experience. Mr. Rosenstein can be reached at Rosenstein & Associates (951) 296-3888 – thetemeculalawfirm.com Rosenstein & Associates provides an initial 30 minute consultation at no cost.