THE LAW AND CIVIL ENGINEERING – AUGUST 2021 NEWSLETTER
Confirm It In Writing
by Eugene Bass
Generally, oral contracts are enforceable and legally valid. “They are not worth the paper they are written on” applies when there is a dispute and the parties find that their respective recollections of the terms of the agreement differ. A contract may be oral in the sense that both parties have not signed their names to a document that expresses their understanding. That is not to say that writing cannot play an important part in the oral contract, however.
Oral agreements should be confirmed in writing. The written confirmation or memo does not convert the oral agreement to a written agreement unless the parties sign a new agreement to replace the original. It does make it easier, however, to determine what the parties intended in their oral agreement, especially when memories fade and circumstances change.
Written contracts typically provide that changes must be in writing and that the terms of the change must be agreed upon before the changed work is done. Frequently, the writing requirement gets omitted. This is an area that often ends up in litigation where the parties cannot agree on the scope or payment for changed work. One party may assume that an extra is not extra but only something to balance a previous offsetting change. The confusion can be essentially eliminated by a brief written confirmation of what was agreed, stating the scope of the change and the agreed price or basis for charging.
If one party sends a confirming letter to the other party and there is no correction of the letter, the letter will serve to help express the understanding of the parties. It’s good policy to respond to the letter if only to confirm receipt but especially if there is any disagreement as to any facts stated in the letter. Special care should be taken to not misstate or restructure the terms of the agreement in the confirming letter unless the changes are clearly stated. Then, some confirmation of the changed terms would be necessary to have an enforceable agreement. When a confirming letter is received it should be carefully reviewed to be sure that it accurately reflects the oral understanding being confirmed.
Written confirmation of oral agreements can aid significantly in avoiding misunderstandings, preventing disputes and should be included as part of any job management.
This article is intended only to provide general information regarding legal issues. It is not to be relied upon for legal advice. Contact your attorney for advise and guidance on general and specific legal issues.