Agreement – Do you have one?

What is an agreement? Simply it is a meeting of two or more parties that may or may not be binding on them.

Agreements can be verbal or in writing, partly verbal, partly in writing and if things get really complex can even have terms implied.

Agreements turn into contracts when there is consideration, such as paying a deposit or one party performing an act in part performance of the terms of the agreement and the parties intend the agreement to be legally binding on one another.

Recently I received an email from a client in which he described the terms of an agreement that he had drafted into a standard form contract and attached to the email. The terms of the contract, which had been signed, did not reflect the agreement he described- most importantly it did not state he would be paid the amount of money he said had been agreed verbally.

Clearly communicating the terms of your agreement is so important but so easily overlooked in the hustle of business. Take the time to step back and make sure everyone involved knows what has been agreed.

Obviously putting terms in writing is a good start. A Heads of Agreement sets out the important points without having to worry about clear drafting or being committed too early but even a confirming email setting out what you understand is a good way to begin.

There are many legal precedent websites available and the framework of those documents are legal but they are also generic so they do not cover every, or even most situations. If you are going to use those precedents you need to understand the terms being used or the document ends up being as confused as you.

Proper legal advice will provide you with drafting that fully describes your agreement. In addition your lawyer should highlight aspects that you may not have considered; most particularly in the ‘What if it goes wrong?’ category.

Most people are concerned about the cost of such legal advice but the cost of righting the wrong is always greater.