Which contracts or agreements are required to be in writing?
Generally, state laws require certain contracts or agreements to be in writing to protect both buyers and sellers from being taken advantage of, and from fraud. Under most states' laws, the following agreements and contracts are required to be in writing and signed:
- The sale of land, or a home, or an interest in land. This includes the sale of easements and options to purchase lands.
- Goods or services being sold for more than $500.00 (this amount may vary from state to state).
- Contracts that may last more than one year. If it is not possible to completely perform the promised action within one year from the date of the contract. This is often the case for service contracts, construction and remodeling projects, large volume orders, or distribution agreements. Lease Agreements may also fall under this category.
- Agreements to take on another person or business's debt. If one person is promising to be responsible for making sure a debt someone else owes is paid, this typically requires a signed agreement.
- Agreements made by the executor or administrator of an estate to personally cover debts the deceased person owed if the estate is not large enough to cover them.
There may be other times when a contract may be required. Many states require loans of a certain amount, or car sales to be in writing and signed. Even for smaller transactions, a written contract may still be a good idea. Having a clear record of what is agreed upon makes resolving disputes simpler and less costly.
If you are unsure about whether or not you want to make a written agreement, or what type of contract to make, reach out to a Rocket Lawyer network attorney for help.
Do all land or home sales require a written agreement?
Generally, yes. Most states require that land and homeowners follow particular state and local laws when buying or selling land, a home, or other real estate. This often means using an agreement that meets state or local legal requirements, and providing certain disclosures. Sellers and buyers may want to ask a lawyer to review these agreements before signing. Additionally, in conjunction with the sale, a deed or title to the property typically needs to be transferred and recorded.
When does the sale of goods or services require a written agreement?
Generally, goods and services valued at $500 or more require a written agreement. Additionally, if a contract may take a year or more, or is expected to last longer than one year, a written agreement is required.
Like the sale of land or a home, several states require a Bill of Sale or other written agreement when selling a vehicle, even if the value is less than $500. There are often requirements to transfer the title and pay taxes or fees that go along with selling vehicles registered in a state.
When shopping in a retail store, however, signing an agreement (other than a credit card slip) when making a big purchase is rare. In a store, or online, the agreement often happens as part of the transaction. Online, checking a box to accept the terms and conditions before completing a sale, or just shopping on a website, is often enough proof for a court that the buyer accepted the terms of the sale. Simply put, walking into a retail store and making a big purchase does not require physically signing anything to be bound to a store's policies.
In private transactions, or for more complicated agreements for goods or services, or both, a signed agreement may be necessary to protect both buyer and seller.
Is a handshake deal enforceable?
While many verbal agreements are enforceable, regardless of whether you shook on it or not, specific terms of a verbal or oral agreement can often be difficult to enforce. For example, if you sell a dining room table to someone for $1,000 split over two payments, half paid on delivery, and with the other half due in 30 days, and the buyer does not make the second payment, you may have trouble enforcing the deal in court without a signed, written agreement. The buyer may claim that the initial payment was what you agreed upon. Without clear evidence to the contrary, such as a video of the buyer clearly accepting the terms of the agreement, a court may not be able to do much without a signed agreement.
Often, however, if after a handshake deal, a person takes action relying on the handshake deal (and had a good reason to do so), the other person may be required to either make good on the deal, or compensate the other party for their time, losses, and expenses. These situations can be complicated, and typically require the person who took action to prove they did so reasonably, or as instructed by the other person.
Not all deals are required to be in writing. Often, smaller, less valuable transactions, or short-term services, may not require a written agreement at all. Depending on your comfort level, however, a written agreement can make sure both buyer and seller are on the same page.
There are lots of technicalities that can be used to try to get out of a contract that is not in writing, but not shaking on a deal is not one of them. Courts have a great deal of leeway in deciding whether a contract is covered by the statute of frauds, and when an oral or verbal agreement can be enforced. A handshake may be considered evidence, but it may not be good evidence. After all, people shake hands just to say hello.
If you have more questions about writing a contract or agreement, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.