3 Types of Contracts That Must Be in Writing

Discover the three types of contracts that must be in writing to ensure legal validity and enforceability. Our guide provides clear explanations and examples to help you understand these essential agreements.

In the realm of business and legal agreements, certain contracts are required by law to be in writing to be enforceable. This article explores three types of contracts that must be in writing, provides a step-by-step guide for creating these contracts, offers practical advice, and includes examples for clarity.

Why Written Contracts Matter

Written contracts serve as a clear record of the terms agreed upon by the parties involved. They help prevent misunderstandings and disputes, providing legal protection and clarity. In many jurisdictions, certain contracts are mandated by the Statute of Frauds to be in writing to be enforceable.

1. Real Estate Contracts

Overview

Real estate contracts involve the sale, lease, or transfer of property. Due to the significant financial implications and the complexity of real estate transactions, these contracts must be in writing.

Step-by-Step Guide

1. Identify the Parties: Clearly state the names and addresses of the buyer and seller (or landlord and tenant).
2. Describe the Property: Provide a detailed description of the property, including its address and any relevant legal descriptions.
3. Outline the Terms: Specify the purchase price or rent amount, payment terms, and any contingencies (e.g., inspections, financing).
4. Include Signatures: Ensure that all parties sign and date the contract.

Example

Real Estate Purchase Agreement

• Parties: John Doe (Buyer) and Jane Smith (Seller)
• Property: 123 Main St, Springfield, IL
• Purchase Price: $250,000
• Terms: Buyer to provide a $25,000 deposit, with closing scheduled for [date].
• Signatures:
  • Buyer: ______________________
  • Seller: ______________________

2. Contracts for the Sale of Goods Over a Certain Amount

Overview

Under the Uniform Commercial Code (UCC), contracts for the sale of goods priced at $500 or more must be in writing. This requirement helps protect both buyers and sellers in significant transactions.

Step-by-Step Guide

1. Identify the Parties: List the names and addresses of the buyer and seller.
2. Describe the Goods: Provide a detailed description of the goods being sold, including quantity and specifications.
3. State the Price: Clearly indicate the total price of the goods and payment terms.
4. Include Signatures: Ensure both parties sign the contract.

Example

Sales Agreement

• Parties: ABC Electronics (Seller) and XYZ Retailers (Buyer)
• Goods: 100 units of Model X123 TVs
• Price: $15,000($150 per unit)
• Terms: Payment due within 30 days of delivery.
• Signatures:
  • Seller: ______________________
  • Buyer: ______________________

3. Contracts That Cannot Be Performed Within One Year

Overview

Contracts that cannot be completed within one year from the date of agreement must be in writing. This requirement helps ensure that the terms are clear and enforceable over a longer period.

Step-by-Step Guide

1. Identify the Parties: Clearly state the names and addresses of all parties involved.
2. Outline the Terms: Describe the obligations of each party and the timeline for performance.
3. Specify Duration: Clearly indicate that the contract extends beyond one year.
4. Include Signatures: Ensure all parties sign and date the contract.

Example

Long-Term Service Agreement

• Parties: Tech Solutions Inc. (Service Provider) and Global Corp. (Client)
• Services: IT support and maintenance services for a period of three years.
• Terms: Monthly payment of $2,000, with services commencing on [start date].
• Signatures:
  • Service Provider: ______________________
  • Client: ______________________

Practical Advice for Creating Written Contracts

1. Be Clear and Specific

Use clear and precise language to avoid ambiguity. Clearly define all terms, conditions, and obligations.

2. Include All Necessary Details

Ensure that all relevant details are included, such as dates, payment terms, and descriptions of goods or services.

3. Review and Revise

Before finalizing the contract, review it thoroughly. Consider having a legal professional review the document to ensure compliance with applicable laws.

4. Keep Copies

Maintain copies of all signed contracts for your records. This will be useful in case of disputes or misunderstandings.

5. Communicate Openly

Encourage open communication between parties throughout the contract process to address any concerns or questions.

Example of SERVICE AGREEMENT

This Service Agreement (« Agreement ») is made and entered into as of [Date] by and between:

1. Client:
[Client Name]
[Client Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]

2. Service Provider:
[Service Provider Name]
[Service Provider Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]

WHEREAS, the Client desires to engage the Service Provider to provide certain services as described herein, and the Service Provider agrees to provide such services under the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

1. Services Provided

The Service Provider agrees to provide the following services to the Client:

• IT support and maintenance services, including but not limited to:
  • Network management
  • Software installation and updates
  • Technical support
  • Data backup and recovery

2. Term of Agreement

This Agreement shall commence on [Start Date] and shall continue for a period of [Number of Years/Months] until [End Date], unless terminated earlier in accordance with the provisions of this Agreement.

3. Compensation

The Client agrees to pay the Service Provider:

• A monthly fee of $[Amount] due on the [Day] of each month.
• Additional fees for services outside the scope of this Agreement will be billed at a rate of $[Hourly Rate] per hour.

4. Payment Terms

• Invoices will be issued monthly and are due within [Number of Days] days of receipt.
• Late payments will incur a fee of [Late Fee Percentage]% per month on the outstanding balance.

5. Confidentiality

Both parties agree to keep confidential any proprietary information received from the other party during the term of this Agreement. This obligation shall survive the termination of this Agreement.

6. Termination

Either party may terminate this Agreement with or without cause by providing [Number of Days] days written notice to the other party. Upon termination, the Client shall pay for all services rendered up to the termination date.

7. Indemnification

The Service Provider agrees to indemnify and hold harmless the Client from any claims, damages, or liabilities arising from the Service Provider’s performance of services under this Agreement.

8. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of [State].

9. Entire Agreement

This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements, understandings, and negotiations, whether written or oral.

10. Amendments

Any amendments to this Agreement must be in writing and signed by both parties.

IN WITNESS WHEREOF, the parties hereto have executed this Service Agreement as of the date first above written.

CLIENT:

[Client Name]
[Title, if applicable]
Date: ________________________

SERVICE PROVIDER:

[Service Provider Name]
[Title, if applicable]
Date: ________________________

Notes:

• Replace placeholders (e.g., [Client Name], [Amount], [Start Date]) with the actual information relevant to your agreement.
• Ensure that both parties review the contract and understand all terms before signing.
• It may be beneficial to have a legal professional review the contract to ensure it meets all legal requirements and adequately protects both parties’ interests.

Conclusion

Understanding the types of contracts that must be in writing is crucial for anyone involved in business transactions. By following the steps outlined in this guide and utilizing the provided examples, parties can create enforceable contracts that protect their interests. Always consider seeking legal advice to ensure compliance with local laws and regulations.