Implied Contracts

Last week I busted the myth that Verbal contracts don't hold as much water as written contracts.

What many people don't know is that there's another type of contract that has the same legal force as an express (written) contract: The Implied Contract

From Wikipedia:

"An implied-in-fact contract (also, "contract implied-in-fact" or simply, "implied contract") refers to a contract agreed by non-verbal conduct, rather than by explicit words. Such contracts are formed when one party accepts something of value knowing that the other party expects compensation."

"Many businesses are based on implied-in-fact contracts not covered by law, but by mutual interest of the parties."

Of course, it's often easier (and cheaper!) to defend a written contract, but I think our many businesses would never get off the ground if they had to pay a lawyer to draw up an overwrought contract everytime they did business with another company, especially if doing business clearly holds mutual benefit.

At the end of the day, if you are lacking a full-on written contract, do not despair. A verbal agreement PLUS an implied contract PLUS written evidence in the form of emails (also between 3rd parties) PLUS 3rd parties who are willing to testify will put you in pretty good stead.

Although lawyers are known to nitpick on the finer details, especially pre-trial (it's worth it when you're paid by the hour), a judge will very quickly figure out whose rights are being infringed upon.

The only way to achieve long-term business success, is by running an honest and ethical business.

Loose Verbal Agreements

I love how the movies sometimes influence our thinking about everyday life. Here are some myths that you may or may not believe:

1. Cardoors can stop bullets (myth busted)
2. Cars explode when you shoot at them (myth busted)
3. When shot in the chest your body will go flying backwards through the air (Newton's 3rd Law would have the shooter flying backwards as well)
4. Verbal agreements aren't legally binding (Remember the guy in Jerry Maguire who said "My word's as strong as oak" and then signed with someone else, leaving poor Jerry no recourse?)

I'll address movie myth 4.

Gilham's Solicitors has a very clear article on verbal contracts:

"It is immaterial whether the contract is verbal, in writing, or partially verbal and partially written, although common sense says that recording the agreement in writing creates a document that may be referred to for its terms in the event of a dispute between the parties."

Furthermore,

"Draft contract documents, emails, letters and order forms may lend assistance to deciding the terms of a verbal agreement, and courts have used similar agreements with third parties to apply a standard of reasonableness in determining the terms of the contract in the absence of writing."

Keeping your word is the right thing to do and will build a better society, and it's for this reason that the law recognizes verbal contracts. You may not subscribe to this belief, but realise that a lifetime's reparations might not regain you your integrity once you've sacrificed it.

Also don't try myths 1 to 3 at home...