For many small businesses in South Carolina, hiring a lawyer for all contracts with other parties can be cost-prohibitive. Certainly, for contracts involving substantial amounts of money or with substantial effects on the business, it is always best to retain an attorney. The following are some thoughts about contracting without a lawyer, and financial considerations if seeking a lawyer.
- Understand that oral contracts are still legally enforceable. The contract is made when one party has made an offer involving consideration, and another party has accepted the offer with consideration. Consideration just means the there has been a promise of a quid pro quo (Latin for “this for that”). In other words, as a promise to give another party something when the other party is providing nothing in return is not enforceable. A writing is always recommended, as it provides evidence to a court of the contract. It also helps define the contract and helps eliminate misunderstandings between parties. Understand that for some contracts the party must have a contract signed by the other party for the courts to consider the evidence of a contract. This is called the “Statute of Frauds”. It doesn’t mean a contract didn’t occur, but that the court cannot rely on oral evidence and must have a writing signed by the party against whom the suit is brought. This includes contracts dealing with land, marriage, high dollar amounts, or contracts that cannot possibly be completed within a year. When it doubt, seek a lawyer, but understand that smaller contracts made orally are still enforceable contracts in court.
- When drafting a written contract, it is best to be as precise as possible in what is being exchanged. This is particularly the case for work projects. By the “Parole Evidence Rule”, courts cannot consider any evidence of an oral agreement that contradicts what is in a written contract. Therefore, it’s important to understand that when a contract is made in writing a party cannot rely on oral agreements outside the writing that contradict in any way. This does not prevent evidence of agreements that do not contradict the writing. Additionally, if parties did not come to an agreement about a particular aspect of the contract, they can look to industry standards and reasonableness in determining what should be part of the contract. Again, a detailed and precise written contract prevents the potential litigation and questions of what the court might decide about ancillary issues.
- Though a writing must only be signed by parties, it is good practice to have a notary witness and notarize the contract. In some cases, like contracts dealing with Real Estate, marriage, and long-term projects, there might be a witness and/or notary requirement. Ensure to at least consult with an attorney about those questions.
- If one party retains an attorney, that attorney can be used by both parties to draft the help execute a contract. It is preferable for both parties to have their separate counsel, but financial considerations may deter this course. It is important to remember that the attorney will be working in the interest of the party who retained him, though he has the duty of truthfulness with the other party. The adverse party should sign a waiver acknowledging he understands who has retained the attorney and the attorney’s duties. Both parties could retain an attorney to solely draft the contract to be executed by the parties. In that event, the parties would have to waive conflict, and the attorney could not represent one party against another. Again, recommended for both parties to retain counsel.
Call The Bill Connor Law Firm at 803-937-5571
