The importance of putting your legal intentions in writing and complying with the requisite formalities
– Extract of speech to Shoalhaven Heads Combined Probus Club, 13 February 2015.
When parties to an agreement, or even a single party in the case of unilateral intentions (such as wills, powers of attorney or donations) have a document recording what it is they want, that is well drafted, that is signed and witnessed by an independent, competent adult, there is less chance that the written terms will be disputed and when a dispute does arise, you have a better chance of resolving it early on than when you have no written agreement or a poorly drafted written agreement.
The validity and enforceability of oral agreements or agreements implied by actions
Just because your legal intentions are not written down does not mean you have no recall to the law when your spoken intentions or agreements, or intentions and agreements brought about by actions, break down. Generally speaking, oral or implied agreements or other legal arrangements not put in writing are as legally valid and enforceable as if they had been written down. However, you could still struggle to obtain any legal relief because often legal, valid intentions might not be enforceable in a court of law if they are not written down and properly executed.
At Common Law (that is, judge-made law) there is no requirement to put any agreement in writing. It does not matter whether you agreement is written down, made orally or implied by actions. All of these methods of communicating your legal intentions are acceptable and enforceable. Obviously, however, the actual terms of orally-made and implied intentions have not always been easy to ascertain and in fact have given rise to- as well as complicated- a great deal of litigation. Therefore certain pieces of legislation (or Parliament-made laws) have been introduced to make it a requirement that your intentions be put in writing in order that they be enforceable by a court (in other words, for the court to be able to offer some sort of relief to the wronged party) and also to prevent fraud. Sometimes legislation will also insist on other formal requirements for the enforceability of the document such as registration.
In Australia this is certainly the case with any agreement to do with land or fixed property (real estate). You cannot buy, sell, restrict the rights in your own property or obtain any additional rights over someone else’s property and expect these rights or obligations to be upheld by others without putting that agreement in writing and having that written document properly executed and registered at Land and Property Information. In addition, you will be required to comply in certain instances with other formalities, such as having certain stamps affixed to the contract that prove, for example, that you have paid stamp duty, etc. An agreement that doesn’t comply with the formalities is usually valid, but also usually unenforceable.
Here is a specific example: When leasing property, you should have a contract. But if you intend on leasing the property for a period of longer than 3 years, no matter what term is provided for in the contract, you must have the lease registered at Land and Property Information or you have no protection against a landlord who decides to end the agreement early. This is particularly important when renting for business purposes where the actual location of your business might be vital to its success.
A paper version of your agreement or other legal intentions makes things more clear-cut, gets to the nub of the matter quicker and consequently may save a lot of time and money. In the event of a dispute, it will also allow a lawyer to assess more quickly whether you have a case that will be worth your while to take to court. Oral or implied contracts, for example, are often very difficult and expensive to prove, making the risk-payoff not worthwhile for many wronged parties.
Putting your agreements and other legal intentions in writing will achieve the following:
1.It will spell out the expectations of each party. Then everyone knows what needs to be achieved. The preamble in a contract for example, is where you would summarise what it is you want to achieve.
2.It avoids misunderstanding and consequently may prevent or shorten any dispute. Most people don’t go out of their way to breach agreements. They will do so however, when they feel they have been taken advantage of. Quite often that is not actually the case. What has in fact happened is that the expectations were not spelled out in detail at the beginning or were misunderstood.
3.It defines procedures – particularly procedures as to what will happen in the event of dispute. This prevents parties from simply suing each other, but usually encourages some dialogue once the dispute has arisen with the goal of avoiding legal intervention and often wasting lots of money.
4.Has a psychological effect. A written contract makes parties more serious about their actions and obligations.