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What is a Written Contract?

By Erin J. Hill
Updated May 16, 2024
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A written contract generally refers to a written document outlining an agreement between two parties. The parties can be individuals, businesses, or organizations. All factors or portions in the agreement must be included in the agreement, and each party involved has to sign the document in order for it to be considered valid.

In many cases, a written contract is typed and submitted by a licensed attorney. This doesn’t have to be the case, as simple contracts can be written by the individuals involved. To ensure their validity, contracts written in this way should be approved by an attorney. Most simple written agreements will hold up in a court of law, but it is a good idea to double check.

The purpose of the written contract is generally to ensure that both parties fully understand the agreement and are committed to complying to its stipulations. Contracts may between a buyer and a seller or a product, between someone hiring the other person to complete a specific job, or between two parties who are undergoing a business venture together. When each individual or business signs the contract, he or she is acknowledging than an agreement was made and that he or she understands the responsibilities involved.

A written contract also acts to protect both parties from breach of contract. This means that if one person backs out of the agreement after services or other obligations have been rendered by the opposite party, legal action may be taken. For example, if a company completes work for another company and is not paid within an acceptable time frame, a lawsuit can be filed in order to claim the money earned. The written contract is generally used as evidence of an agreement and of the details of that agreement.

Those who are self-employed or who perform work as independent contractors should have a standard agreement or contract written up for each client or customer to sign. This ensures that payment will be made for all work completed, and allows the contractor to pursue legal action in the case of nonpayment. In most cases, it is hard to prove an agreement without a written contract in place. The standard agreement should be reviewed by an attorney.

Requesting a written contract can also give indication of a business’s or individual’s character. If someone refuses to sign an agreement which outlines the details of an arrangement, it is a good sign that he or she may not follow through with obligations. Most legitimate operations will be willing to sign a contract.

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Discussion Comments
By anon318302 — On Feb 06, 2013

My husband purchased a car from a friend, and they had a written agreement saying how much he would pay a month and when it would be paid off. Some complications came up and my husband got into a small argument with this lady and she just came to my house and took the car without notice. My husband went outside to wipe the snow off the car so it wasn't as heavy in the morning for work and the car was gone. The car was still in this lady's name and she agreed to sign it over after it was paid off. The police officer told us the written agreement is a civil matter and because the car is still in her name, she can legally take it back. Is this officer right? The car also had all of my husband's belongings and some of my daughter's belongings in it, including things she needs for school and our tax paperwork. Is our only option here to take her to court?

By anon287396 — On Aug 25, 2012

What happens when a selling party increases the price after initial payments have been made?

By starrynight — On May 01, 2012

@sunnySkys - Yes, reading a contract of employment all the way through is usually a good idea. I had a good friend who failed to read his contract for his last job all the way through. A few months after getting hired, he learned that he had benefits he wasn't taking advantage of. He would have known he had them if he had just read his contract!

I think we all deal with contracts more than we think we do, especially online. A lot of online services have "Terms of Service" you sign electronically. I'm pretty sure that counts as a contract. And most people don't read those all the way through either!

By sunnySkys — On Apr 30, 2012

@Monika - I agree, a written employment contract (or really any kind of written contract) is always better than a verbal contract.

One other thing I want to say about written contract is that you should always read before signing. I know this seems like a no-brainer, but I know a lot of people who feel like contracts are just too complicated and don't read through the whole thing. Instead, they trust the person they're signing the contract with.

This might work sometimes, but I think it's better to always read the fine print.

By Monika — On Apr 30, 2012

I think a written business contract is definitely the best way to go. I know verbal contract are considered binding as well, but they are very hard to prove. I think there is an old saying that "a verbal contract is worth the paper it's written on" or something like that, and I think it's true!

Anyway, if you're going to do a written contract without a lawyer, I think you can also get it notarized for extra piece of mind. Like the article said, you don't necessarily need a lawyer in order to create a binding contract.

By honeybees — On Apr 29, 2012

I have worked at jobs where they give you a policies and procedures manual you have to read the first week you are there during your orientation.

Before the first week is over, you sign an employment agreement saying that you have read and understood what is stated in the employee manual.

I know they do this for their protection, but many times I have wondered why because a lot of times it isn't enforced.

The dress code is probably one of the biggest things that is not followed. When I worked at a bank, we had strict policies about what we could and couldn't wear.

As an example, we were always supposed to wear closed toe shoes and panty hose. One day one of the tellers showed up in flip flops and wondered why everyone was making such a big fuss about it.

Her excuse was since she is behind the counter nobody sees what shoes she is wearing so why does it matter.

The bank had become lax about the panty hose as many women did not wear them in the summer, but they didn't let her continue to wear the flip flops. Basically, if she wanted to keep her job, she wouldn't show up in them again.

By bagley79 — On Apr 28, 2012

When you read books from earlier parts in history or watch old movies, you often hear the expression that a handshake was all that was needed between two parties.

That might have been OK back then, but I sure wouldn't want to rely on that today. There are too many dishonest people who try to get out of paying for services or their obligations.

I think someone would be foolish to go into business and have no written contract made up. My son has a small lawn care business in the summer and he has a written contract for his regular customers.

He just went online and found some written contract examples so he would know how to word them, and printed them off with his logo and contact information.

Even with a small part-time business like this, I think people see that you are serious about your work and you see this as a business.

By LisaLou — On Apr 27, 2012

My husband and his brother have their own concrete business on the side. Before they complete any work, they have the homeowner or responsible party sign a written agreement contract.

When they first started out with this business, this contract was a simple piece of paper that stated the date the work would be completed by and how much they would receive for their services.

As their business grew, they ran into situations where clients were slow at paying them so they met with an attorney and had a new agreement drawn up.

This contract was more professional looking, and had legal terms that were pertinent to the nature of their business. I don't know if this contract would hold up better in court than their first one, but it certainly made a much better impression and showed they were serious.

By golf07 — On Apr 27, 2012

When my son sold his car to a friend, he had a written contract made up which they both signed.

He works in the real estate business and knows how important it is to have something like this put in writing and signed by both parties.

You always hope everything will go as planned, but you never know, and this way, he at least had something that would hold up in court, if needed.

The contract simply stated what date each payment would be made by, and the amount of the payment. This document was signed and then witnessed by a notary.

Thankfully, there weren't any problems and my son received all the money for his car. The contract gave my son a little bit more peace of mind he would receive his payments. It also gave the person who was buying the car a little bit more incentive to make sure the payments were made.

If there had just been a verbal agreement, there would not have been any evidence of what their understanding was.

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