Post No.: 0305
It was previously mentioned by Furrywisepuppy in Post No.: 0089 that, in Contract law, ambiguity shall be interpreted with the benefit of the doubt in favour of all persons who did not draft an agreement/contract, hence one should ensure that any agreements one drafts are unambiguous, clear and thus watertight. And parties cannot use ignorance as a defence regarding information that has been made explicit or available to them.
Some other basic Contract law principles that are useful to know are to check whether there is truly – an agreement at all (whether an offer that was made by one party was accepted by another), a consideration (whether a bargain, or two-way exchange, was made), an intention to create legal relations (so the offer wasn’t just, say, a joke), whether the agreement was not procured under undue influences or an exploitation of power imbalances, and whether the parties had the capacity to understand what contract they were entering. These criteria must all be present and satisfied in the creation of an agreement. If any of the above are absent or not satisfied then the contract will likely be considered void and unenforceable.
One common misunderstanding that many people believe in is that verbal agreements are never enforceable. Verbal agreements are, generally, still binding – it’s just that written agreements are invaluable if there’s ever a dispute between what was exactly agreed upon or if one of the parties denies that a verbal agreement was even ever made, which is frequently the case because people remember things differently!
So you can’t back out of an agreement by confessing in court, “Yes I verbally agreed to exactly that, but we didn’t get it written down so there’s no agreement.” What might happen if an agreement wasn’t written down but was merely verbally agreed upon though is that one of the parties might sneakily claim, “No I didn’t verbally agree to that, and you have no written proof of an agreement to show the courts either.” In which case the other party will be stumped because indeed she/he will find it almost impossible to prove that a agreement was in fact ever made. (However, no one is condoning lying in court here!)
That’s why it’s still always best to get any important agreements, plus all of the relevant details (e.g. the loan repayment terms – otherwise the borrower might ‘owe the lender all the money back by whenever’ if no date or timescale has been specified), written down on paper and signed together; even amongst people who’ve known each other for years. It’ll help concretely establish the facts of the agreement, to each other and in a court if need be. The details are most important in any agreement, and getting things written down helps us to think about them too; and these details could be most crucial if there’s any dispute later on. Meow.
Communication, agreement, understanding and trust are what allow coordination between voluntary parties. A promise is required to make a contract, but not all promises are legal contracts. For example, agreements/contracts are not legally enforceable in the courts if there were no intent to create legal relations, even if the promise was serious but otherwise informal and didn’t involve money (e.g. agreeing to come to dinner but then failing to turn up wouldn’t involve a legal intent to turn up even though it was a serious promise and it may cause real (social) harms/losses to the other party if one doesn’t turn up). In general, promises made between family members or friends, or between people in social rather than work contexts, have no intent to create legal relations.
They are also not enforceable if either side didn’t take the agreement seriously, such as it was a joke or mere fluffy frolic and banter, even if it appeared formal and involved money (e.g. one party saying that they’ll give another party £1,000,000 if a dare is completed isn’t a real promise because the first party meant it as a joke and the other party should’ve reasonably understood that it wasn’t serious).
Another case is if the agreement was immoral, unconscionable or illegal, even if there was a clear bargain (a two-way exchange) and it was serious, involved money and signatures were signed on a written contract (e.g. contracts between girlfriends and boyfriends, bribery or the exploitation of vulnerable groups, are immoral, as is ‘putting out a contract on (to kill) someone’, ironically). The law otherwise doesn’t care if a bargain was a good or fair one or not, as this is up to people to decide for themselves (e.g. if you offer way over the market price to receive something), unless one party caused the unfair circumstances for the other (e.g. something was falsely advertised).
And an agreement is not normally legally enforceable if it was just a one-sided promise to make a gift to someone, even if that promise was real and contracts were signed. So there’ll be no enforceable agreement if there’s no bargain, or two-way exchange, made, or if something is to be given for nothing, or the exchange involves something that one party doesn’t care about, didn’t ask for, or it offers them no value in return (e.g. things done or given between wives and husbands are seen as gifts and are not formal bargains or trades of commerce, or promising not to tell anyone about an affair if the other party buys them a car doesn’t constitute a bargain if the other party doesn’t care if they tell, or swapping a £20 note for a £10 note is equivalent to gifting £10 for nothing (unless the particular £10 note was somehow special) so this has no bargain or exchange to enforce). So two parties must, normally, make a promise to each other in order for an enforceable contract to form between them both.
This all means that some contracts aren’t enforceable no matter what, such as contract killings, and hopefully soon non-disclosure agreements (NDAs) that are abused by rich and powerful individuals or organisations/institutions who want to protect their reputations by silencing or gagging their victims from reporting crimes, harassment or discrimination.
Note that only the parties that make any promises to the other are held to those promises to the other i.e. these responsibilities cannot be shifted onto others. A classic example is going to a store and purchasing a product that turned out to be faulty – the buyer’s contract is with the seller, hence the seller cannot push the responsibility of dealing with the fault onto the manufacturer of the product (unless the buyer and manufacturer explicitly agreed to these terms). It’s the seller who must make the situation right for the buyer.
The law may stand behind a serious public promise (as opposed to a private, joke or gift promise) though. And note that morality and legality are ideally supposed to align purrfectly with each other but that’s not always the case. What’s legal isn’t always moral (e.g. aggressive forms of tax avoidance), and what’s illegal isn’t always immoral (e.g. homosexuality in some countries, although some will dispute that it is indeed immoral). Morality is subjective but laws are more concrete; although still subject to a degree of subjectivity and interpretation at times, until a precedence is set in some cases. All the above may depend on which place of jurisdiction you’re in too.
This means that it’s arguably unsophisticated to use the logic of ‘it’s legal so it’s okay and that’s that’ or ‘it’s illegal so it’s not okay and that’s that’ – if we believe that something is legal but immoral, or illegal but moral, we should campaign to get the laws changed rather than merely conform to or tow the existing line. Laws can evolve if there’s enough support to change them. Although in most cases it’d still be sensible to obey the current laws in the meantime if possible.
Sometimes it can seem socially awkward to create a comprehensive agreement in writing regarding contracts made between family members or friends (such as specifying the amounts, dates, timescales, what will void the contract, what will happen if one party fails to honour the contract, etc.) – as if family members or friends can’t or don’t simply tacitly and implicitly trust each other. But a written agreement can really help regarding something that involves a lot of money or will have major consequences if things go wrong and both parties cannot just write the situation off and chalk it down to experience if it does.
So if it’s not something that you can simply let slide if it goes wrong then get it written down and signed to create intended legal relations, whoever you’re with. If no party is intending to fail to honour the agreement then getting it in writing shouldn’t be a problem. (Prenuptial agreements are an especially awkward one though, as if the details of the relationship (beyond the status of the marriage or union itself) must be protected by law rather than by an implicit trust or ability to handle any future disputes as a couple without involving the courts. It could kill the romance! However, if one is happy with the default legal arrangements (which are essentially agreed to and signed for when couples get legally married) then prenuptial agreements are not really necessary.)
On the other hand, you must take into account how you’d feel and how it’d affect the relationship if you ever felt compelled to bring a family member or friend to court if they failed to uphold their side of a bargain. Will it be worth it? Do you think the relationship will survive? This is the difficulty of mixing business, or something that feels more like business, with something personal; or mixing market norms with social norms.
…These are very broad principles and exceptions to what agreements are enforceable and unenforceable, and there are cases where it’s not so clear-cut. There are some exceptions to even these exceptions and that’s why lawyers will continue to have a job! Hence you are advised to consult one in your relevant place of jurisdiction if you are unsure of anything or if a particular case is significant to you.