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Why You Need to Put Verbal Agreements in Writing

Updated on August 22, 2017
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Dreamworker believes that keeping life simple and uncomplicated is one of the best ways to enjoy it!

There are good reasons for people to put their agreements in writing.

While I am not an attorney, I have lived a long time, seen much, and run a number of successful business.

As a result, I have seen what happens when people come to terms about certain issues but only do so verbally.

In years gone by, giving a "gentleman's handshake" was enough because there were more reasons for people to trust one another, the population was smaller, and there was such a thing as integrity.

Today, things are different.

Therefore, if you don't make sure that you and the other party are not clear about your intentions, you could be giving yourself a world of hurt!

The best way to protect your interests is to always get agreements in writing.
The best way to protect your interests is to always get agreements in writing. | Source

Written Vs. Oral Agreements

Let's say your neighbor agrees to mow your lawn for $50. You both agree and shake hands and the following weekend he gets the job done.

Then he presents you for a bill for $75!

You never put anything in writing, so you cannot prove what he told you. He did do the work, so if you don't pay him what he wants, he can take you to small claims court to collect.

If you had written up a short agreement that stated what each of you expected to happen and dated it, and then each of you had signed it, you wouldn't be paying him $75 and you wouldn't be dealing with a possible small claims court situation which, in the end, might cost you even more.

This is just a small example, but it is typical of problems people have when they aren't perfectly clear, in writing, about what they are agreeing to do.

Written Agreements Clarify Situations

The point of this example is that people's intentions may not be honorable or they may simply misunderstand the terms of the oral agreement.

However, when it's in writing, signed by both parties and dated, there can be no misunderstanding.

It is especially important to remember this because sometimes those you are dealing with move away, leave their jobs, or even pass away right in the middle of a situation where they could have provided important information that could save you a good deal of money and grief.

Do You Always Need a Legal Contract?

If you're going to agree to promises made by another party, the smart thing to do is to have an attorney draw up papers that clearly state what each person wants to have happen.

However, some situations don't need to have that level of formality. Nonetheless, you should always get something in writing so that you can protect your interests.

Years ago someone at my school gave me incorrect information about a Social Security retirement issue.

I jotted down their name, the date, the issue that was being discussed and summarized what they said. Then I filed the note away.

Later that year I learned that this person had misinformed me and that the decisions I had made based on the information they gave me could have cost me a ton of money and problems.

That little note I wrote is what saved the day. I gave a copy to the people at the Social Security office, and in so doing, was able to make positive changes in my retirement health care program without receiving any penalties.

Even though the person who misinformed me did not write that note, I had documented what she'd done, and it was enough to have to resolve my issue.

"In Writing" Is Always Better

The story I just shared worked out OK, but it would have been better had I gotten the individual to put her statement in writing, then sign and date it.

This way, if she changed jobs, retired or simply refused to cooperate, it wouldn't matter, because I had proof of what she had told me.

We tend to feel that people who work in certain jobs know what they are doing, but this isn't always true.

It's good to "trust", but you should always "verify". People say all sorts of things because nobody likes to admit that they don't know what they're talking about.

If you have something in writing, it's always better than having nothing in writing. It's just that simple.

The days of making agreements with "gentlemen's handshakes" are long gone.
The days of making agreements with "gentlemen's handshakes" are long gone. | Source

A Real Life Example

Just today a friend called to ask for help with a problem he was having.

His condo management company had charged him a fee incorrectly, so he called them to see what he could do about his problem.

The clerk he spoke to put him on the phone with the head bookkeeper who told him all late fees and added interest would be removed, the amount corrected and a coupon book sent to him so that he could start paying what he owed.

However, he did not ask her to send him a letter stating this.

Then he got very sick and forgot about the issue.

The next thing he knew, an attorney had sent him a letter telling him to pay a huge amount of money within a month, or they were going to foreclose on his property!

This fee included the incorrect amount for 5 months of payments, late fees, interest and attorney's fees, so what should have cost him $250 turned out to be a request for more than $1800 to settle his accounts.

Now he's had to hire an attorney, and the whole situation has turned into a mess.

Worse yet, the original woman he spoke with has changed jobs, the bookkeeper doesn't remember what she said to him and nobody at the management company will speak with him because the attorney has advised them not to do so!

I'm sure these issues will be worked out, but I'm also sure that my friend is going to have to pay much more than he would have had to pay had he only asked for the bookkeeper to send him a letter telling him what she was going to do.

The Bottom Line

While we would all love to trust everybody and assume that people will stand by their word, this just is not realistic.

Whenever you are making an agreement, even if it is just a personal one, you are still in a manner of speaking doing business.

It just is not good business to make verbal agreements because, as you have seen, things change. When they do, you need some sort of proof, and putting your agreement in writing serves that purpose.

Just as important is that all parties need to clearly understand what has been put in writing and make sure that this is what they intend before signing.

You should always carefully read any written agreement and, if you don't understand it, have an attorney review it before you sign it.

If you make it a habit to use written rather than verbal agreements, especially when it comes to important issues, you'll find that you can avoid many problems.

Notice at the bottom of this post I have placed a copyright notice. I do this on every article because it protects me from people who want to steal my work.

It's just another way of "putting it in writing."

Do you think it's a good idea to get agreements in writing?

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© 2017 Dreamworker

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    • Dreamworker profile image
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      Dreamworker 5 weeks ago

      ThussaysNanaMarie: I think this is a very common mistake people make and it can really cost them in serious ways. Thanks for commenting.

    • ThussaysNanaMarie profile image

      ThussaysNanaMarie 5 weeks ago from In my oyster

      Thank you for that reminder. It's really important that people do not overlook this.