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Always put business agreements in writing

On Behalf of | Dec 5, 2016 | Contract Disputes

It’s always best to get it in writing. Whether an agreement happens orally and organically or with legal forms and pen and paper in front of you, it’s always best to dot those i’s and cross those t’s to make certain that the deal is safe and secure. Even what seems simple has a way of becoming more complex over time.

Oral contracts

Oral contracts can be binding under Louisiana law, but the burden of proof is high. There may be a case for an agreement you reached with a partner, but proving the circumstances are difficult and demanding. The less clear the agreement, especially as time passes, the more likely that problems will arise.

Headfirst Baseball, a youth coaching clinic in Washington, DC, is in court now to determine ownership. Founded in the 1990s by former minor leaguer Brendan V. Sullivan III, also the son of a prominent DC attorney, Robert Elwood joined soon thereafter. The two had a partnership agreement, Elwood argues, and not an employer/employee relationship. After years of working together, however, Sullivan dismissed Elwood, leading to legal action.

The legal challenge

Headfirst is simply one case in a long line of handshake deals to sour with time. Elwood, and many at other businesses before him, claim that they operated as partners. Elwood and Sullivan even used that exact term in company emails. Without a formal written agreement, though, now Elwood must prove this though action and testimony instead of simply pulling out a signed form. It’s an uphill battle that will take time and money, sacrificing a relationship in the process.

Louisiana interpretation

Louisiana law calls for any contract with value over $500 to be in writing, giving exception that “the contract must be proved by at least one witness and other corroborating circumstances.” Headfirst is in DC, but any comparable situation here in Louisiana needs decisive proof of an agreement. When witnesses and other information present their proof, it needs to be specific.

There are three major components to any contract:

  1. The parties must show legal capacity to enter a contract. A minor, intoxicated or mentally unsound person cannot do so.
  2. There must be consent: a two-way offer and an acceptance made.
  3. The contract must be for legal services or goods.

Security in writing

While it’s true that courts will recognize oral contracts under the right circumstances, the burden of proof is difficult and, ultimately, expensive. When an oral contract is reached, it’s important to maintain proof of the agreement. In the Headfirst case, Elwood repeatedly sought documentation but was rebuffed, leaving him in the courtroom today. Compiling witnesses, records and other evidence could prove partnership but, even if he accomplishes this feat, the work relationship is irreparably damaged and it’s likely his days at Headfirst are over.