In most instances, a legal contract can be formed by an oral agreement. However, if one person does not perform, how do you ‘prove’ up the contents of the contract? You have to go to court where it comes down to “he said, she said”. For example, you are a painter. There is an oral agreement that you will paint a house for $1,000. Along the way you determine that some of the sheet rock is damaged and needs replacing. You tell the homeowner the additional work will cost another $1,000, and he agrees. At the end of the job you submit a bill for $2,000 and the homeowner refuses to pay the extra money, stating that you never informed him of the need for the additional work. You bring a small claims court claim against the homeowner where the two of you will have to argue the facts in front of a judge. If you are running a business, this is no way to get paid for your work.
Lesson: While oral contracts are “legal”, enforcing one is a whole different story. The best bet is to have something in writing, setting forth the goods or services to be provided, a price, signatures, and a date.
The real issue for any contract is: Is it enforceable?
CAN YOU MAKE A LEGALLY ENFORCEABLE CONTRACT BY EMAIL OR TEXT?
The short answer is “Yes”. The requirements for an enforceable contract are the same, whether it be on paper, email, or text. For any medium that can display text and allow for the reproduction of text, the requirements for an enforceable contract are the same, being:
- Identification of the parties to the agreement
- Identification of the goods and services to be provided at a price certain.
- An acknowledgment of agreement by the parties to the agreement. This acknowledgment is usually by a signature, electronic signature, or an email or text from the accepting party saying that he or she is in agreement with the offeror’s proposal.
- The date that the agreement was made.
- Additional items that are desirable, but not required, are; a time limit for performance, and a location where the services are to be performed or where the goods are to be delivered. The major difficulties with texts and emails are that often the communications are sporadic, not contained in one contiguous communication, where a crucial element may be missing. For example, consider the following email or text exchange:
Person 1: “Will you do it for $500?”
Person 2: “Yes”
Person 1: “When can you start”
Person 2: “Tomorrow”
Person 1: “Great”
These people may know in their mind what is to be done, but they have not ‘memorialized’ it in a text form, and therefore there is no ‘written’ contract.
For certain contracts, the law requires that the agreements be in writing.
These types of laws are called “Statute of Frauds”. In Texas some of the contracts that are required to be in writing are:
- A contract involving the sale or purchase of an interest in real estate.
- A real estate lease that is longer than one year.
- A promise of a person to pay the debts of another.
- An agreement is not to be performed within one year of the making of the agreement.
- An agreement to pay a commission for the sale or purchase of a mineral interest.
For any size business, large or small, all services or goods provided need to be memorialized by a work authorization or purchase order, which, if properly drafted, are enforceable contracts. If you are a consumer and are contracting for services (home improvements, auto repair, legal services), before you hand over money, it is best to have the agreement reduced to writing, that clearly spells out the obligations of each party.
Contact the Law Office of Elliott Klein, PLLC for a consultation on the drafting of enforceable contracts. If you are a consumer, before signing an agreement or handing money over for an expensive project, contact this office for a review of proposals that are offered to you.