CONTRACTS – IF IT IS NOT IN WRITING, IT MAY NOT BE ENFORCEABLE
Word is bond.
Where there is a right, there is a remedy.
Unfortunately, these statements do not always turn out to be true for well-meaning Canadians who find themselves helpless by law when their oral agreements are invalidated because of the difficulty of proof or contrary written evidence.
Generally speaking, a contract becomes enforceable where there is offer, acceptance, and consideration whether or not in writing. What this means is that to have a binding contract that the courts will enforce, there must be a proposal which has been accepted and there must be an exchange of value for that proposal or promise.
X goes into Walmart, picks up a bar of chocolate, pays to the cashier (or self-checkout, if he wants to leave before 10pm) and walks out as the proud owner of a bar of chocolate, and a few unnecessary calories.
X going to the cashier with the bar of chocolate demonstrates the offer, the cashier accepting payment is the acceptance, and the money paid is the consideration/value exchanged.
Thousands of contracts occur daily with no issues until someone denies or disputes some portion of it. A just moved out of her parents’ and excitedly leases a flat from B. Both parties agree to a monthly rent of $1,000.00 on the phone, with the first month’s rent free due to some work needing to be done on the property before A can move in. B produces a lease agreement stipulating a weekly rent of $375.00 (for a total of 1,500.00) payable on the first date of the lease but assures A over the phone that the discrepancy is just for administrative convenience. She tells A that another written agreement will be produced later with the right amount, but the current contract needs to be signed right away for some reason. A trusts B and signs the contract. 6 months into the lease, A receives a letter from B’s lawyer demanding she pay an outstanding rent of $4,000.00 or face eviction. A consults a lawyer and hears the bad news “You owe $4,000.00. You have no proof that your landlord agreed to a lower rent or a different start date for payment”.
Unfortunately, scenarios like this play out more often than we would like to see at Osuji & Smith, with greater consequences. When the real picture of events is contrary to what is in writing, it is possible, but more difficult to enforce the oral agreement.
This said, the law requires some contracts to be in writing. These include:
- Contracts creating or transferring an interest in land
- Guarantees and indemnities
- Contracts not to be performed within one year from its making
- Agreements to pay someone else’s debt
- Express trust of real property
- Contracts made in consideration of marriage, and
- Lease agreements with terms exceeding 3 years.
Outside these contracts, it is strongly advised that one document every agreement in one way or the other. Even if contracts are made over the phone, one person can send an email or text message to the other party summarizing or confirming what the agreement was.
This ensures that both parties are on the same page regarding what to expect, serves as a reminder, is useful when parties are unavailable to confirm the terms, and should this ever become a legal matter, serves as insurance to protect parties. Even better, is when such contracts are signed.
The importance of documentation cannot be overemphasized, considering how technologically advanced the world has become.
Document the promises your employer gives to you about the terms of your employment.
Document the terms of your budding business partnership.
Document the parenting or custody arrangement you have with your partner.
Document your business agreements.
Similarly, do not sign a document that does not accurately reflect the actual terms of the agreement, or at least register your disagreement with the portions you disagree with, in writing. As much as you can, avoid signing contracts in a hurry, so that you are able to assess your standing appropriately before signing.
Oral evidence is of course helpful to courts, but this is subject to the court assessing the credibility of witnesses and there is never a guarantee regarding who the court will believe. In any events, the cost of litigation is usually higher than the cost of preparing agreements.
At Osuji & Smith, the lawyers are experts in employment law, real estate, family & divorce, business & corporate law, wills & estate, personal injury and civil litigation law. We would be more than happy to prepare agreements on your behalf that secure your interest adequately or to review and advise you on protecting your interests before signing any agreements. Contact us today.
Author: Tolu Adeyemi