When do you have to have a written contract? What if you, or the other party, never signed anything? If you don’t have a written agreement or a signature does that mean that there is not a legally enforceable contract? As a general rule, unwritten contracts are legally enforceable in Tennessee. Furthermore, the lack of a signature on a written agreement does not necessarily mean that the agreement is not enforceable.
Frequently, the biggest problem with unwritten agreements (sometimes called “verbal” or “oral” contracts) is not their legal enforceability, but proving them. If it is your word against someone else’s, it can be tough to carry your legal burden of proof when you are trying to enforce an oral contract.
There are some agreements which Tennessee law requires to be written and which Tennessee law requires to be signed by the party against whom the agreement is being enforced. The agreements that must be in writing are set forth in what is referred to, in legal jargon, as the “statute of frauds.” In Tennessee, as a general rule, you must have the following agreements in writing and signed by the party against whom you want to enforce the agreement:
1. An agreement to pay or to assume the debt or obligation of someone else;
2. An agreement for the sale of land;
3. A lease agreement for “a longer term than one year”;
4. An agreement that cannot be performed in one year; and
5. An agreement for the sale of goods for a price of $500.00 or more.
What kind of written agreement is sufficient to satisfy the statute of frauds? Does it have to contain certain key legal phrases and provisions that would probably only be familiar to lawyers or to someone with legal training? Does it have to be notarized? Do you have to have the original to enforce the agreement?
Generally speaking, it is not necessary that the writing contain precise legal phrasing, that it be notarized, or that you have the original. The statute of frauds will be satisfied if the writing contains the essential terms of the contract (and it is signed). In fact, if there are a number of documents, such as letters, quotes, or e-mails, relating to the transaction, the court can look at all of those documents to determine whether there is a sufficient written agreement. In some cases, the writing on the face of a check, if sufficiently definite, can satisfy the statute of frauds. Keep in mind that, even if the statute of frauds requires a contract to be in writing and to be signed, there are exceptions that may require the court to enforce an agreement even if it does not satisfy the statute of frauds.
Before you assume that you can’t enforce an agreement because of the statute of frauds (or any other reason), be sure and get a legal opinion from a qualified Tennessee business lawyer. Lastly, remember that, by making sure your agreements are reduced to writing and signed by all parties, you may save yourself a lot of headaches and legal fees.