Many clients don’t come to us until they have a problem. A contract helps a businesses to manage risks but what if it is found to be unenforceable? We have been asked all the common questions – ‘Is an email a binding contract?’, ‘We have a verbal agreement, is this enforceable?’, ‘My client never signed the contract but is it still binding?’ etc.
But there is so much conflicting information available that it can often be difficult to determine an answer to these questions. If your contract is unenforceable then it means the business can end up losing out.
Looking on the internet business forums, there are thousands of questions relating to this topic. People are worried that their contract is not binding and they will not get paid or be left open to client disputes. And they have every right to be worried.
Email or a verbal agreements still count as a contract, but there can be a number of problems like proving what the terms of the contract are if it has been agreed verbally, or what terms are enforceable if it is through email. If there has been no signature it can prove difficult to determine whether the terms were actually agreed.
It’s understandable that businesses feel they may not always need a contract. If it is a repeat client, friend or known associate there can be a mutual feeling of trust, so it appears like there would be no need for anything to be put in writing formally. However, this can jeopardise and even ruin relationships; so, why risk these friendships? A changes of client contact or peoples personal circumstances can lead to them reacting differently. Without a contract existing relationship run the risk of turning sour. A contract outlines what has been agreed and helps the business and client to stay protected. It allows both parties to understand what to do in any given situation, and helps to remedy any problems – therefore protecting the relationship.
It is certain that some agreements will lead to problems and by not having a signed contract it can lead to expensive legal battles.
Lord Justice Clarke has previously been quoted saying; “The perils of beginning work without agreeing the precise basis upon which it is to be done. The moral of the story is to agree first and to start work later.”
We would always recommend having a contract and ensuring that it is signed by every client. It is far safer to wait until the ink is dry before starting work.