People often ask whether a contract must be in writing in order to be enforceable or legal in Tennessee. While Tennessee law does recognize oral agreements, it’s always advisable to have a written agreement. There are too many horror stories out there of individuals coming to an agreement on terms for loans, purchases, services, etc. but never putting that agreement into a written document. With an oral agreement, the risk of breaching the agreement or having no recourse in the event of the other party’s breach increases substantially. The potential issues that may arise in a situation involving an oral contract are too numerous to discuss here. Issues such as what accounts as a breach of the agreement, whether there is an opportunity to “cure” a purported breach, what happens in the event of breach, what if one party wants out or wants to terminate the agreement, can one party recover attorneys fees against the other in the event of a legal dispute? These are all topics that can be covered and spelled out clearly in a written agreement. A written contract not only helps to cover a litany of potential issues that may arise in a business agreement, but it provides clarity and consistency on the expectations of the parties, payment terms, and the length of the agreement, among other things. Simply put, it’s hard to envision a situation where an oral agreement would ever be preferable to a written agreement. That is not to say that an oral contract cannot be enforced, but it’s much easier to prove the existence and enforceability of a signed written agreement. And of course, if a contract is written, don’t forget to have all parties sign the agreement.
If you have questions about an existing agreement or need help drafting a new agreement, our attorneys would be happy to assist you.
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