I am fair, I am honest, I am well meaning, I fulfill all my obligations under all my dealings - I assume the other party will do the same. Why should therefore, I insist on incorporating everything in writing? Can't I assume or expect good faith in a contract?
Do not fall in this trap, ever ... trust everyone, but insist on documenting it.
Not making assumptions in contracts and insisting on written terms and conditions in a contract is crucial for several reasons.
Precision. Written contracts specify each party's obligations, rights, and expectations clearly. This helps prevent misunderstandings that can arise from verbal agreements or assumptions.
Evidence. A written contract serves as tangible evidence of the terms agreed upon. In case of a dispute, this document can be invaluable in court or arbitration to prove what the parties had agreed to.
Risk Management. Written terms help manage risks by identifying who is responsible for what, establishing protocols for potential issues, and setting forth procedures for conflict resolution.
Compliance / Enforceability. Properly drafted contracts are more likely to comply with concerned statutory requirements and, therefore, enforceable. Any assumptions or oral agreements may not meet strict legal standards, thereby affecting enforceability.
Accountability / Seriousness. When each term and condition is spelled out, parties are more likely to fulfill their contractual obligations, knowing their duties are recorded and enforceable.
Avoiding Disputes. Assumptions often lead to disputes. Assumptions by one party may not match the other's intentions or understanding, leading to disagreements that escalate into legal disputes.
Dynamic Relationship. Business relationships can evolve. A written contract can anticipate and make provisions for changes, such as scope modifications or the need for additional goods or services.
Professionalism: A written contract reflects a professional approach to business dealings, demonstrating parties' commitment to their contract.
Avoiding Oversimplification: Relying on assumptions can result in oversimplifying complex obligations, which might omit important details crucial for the contract's validity and performance.
Unequal Knowledge / Bargaining Power. If one party has more information or bargaining power, a written contract helps balance the scales by providing a clear contract that both parties have considered and accepted.
Assumptions may feel like a shortcut, but it often leads to misunderstandings, legal uncertainties, and disputes. By insisting on a written contract with clear terms and conditions, parties can establish a reliable basis for their business relationship and reduce potential risks associated with assumptions and unwritten expectations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
