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When must a contract be in writing under California law?

On Behalf of | Sep 23, 2022 | Contract Disputes

Contracts are a key aspect of successfully operating a California business. Not only do they clearly define what is expected when working with other entities, but it can serve as a protective device if disputes occur. Often, companies and individuals are unsure of how to structure contracts, when they will be valid or how to address disagreements as to what the agreement entails. From the start, there are certain key factors to be aware of. One is when the contract must be in writing based on state law.

Does my contract need to be in writing?

There are specific times when a contract needs to be in writing. One such case is if it is not to be performed within one year of when it is made. An example might be a company that wants a delivery of an item for the next year’s holiday season. Another reason to have a contract in writing is if it is a special promise that the entity agreeing to it will answer to another’s debt, default or incompetence.

Real estate transactions generally need to be in writing. Agreeing to lease a property for more than a year or to sell property or an interest of the property should be in writing. When there is an agreement for an agent, a broker or another individual to sell or buy real estate or to lease it for longer than a year, it should be in writing. The same is true if the agent is trying to find a buyer, seller or someone to lease the real estate when the lease will be for longer than a year and they are being compensated or getting commission.

The terms of the agreement are essential with a written contract. If it is not to be completed during the lifetime of the individual who is contracting for the task, it needs to be in written form to be legal. In cases where there is an agreement to loan money or to grant credit of more than $100,000 by a bank or other type of business that is involved in this type of transaction, they should have it in writing.

Businesses should know when contracts should be in writing

When crafting a contract, the objective is for both sides to achieve their goals. Unfortunately, disagreements happen and attempts at negotiation regarding how to settle them is fruitless. Assessing the contract, ensuring that it is properly constructed and followed is crucial to reaching an acceptable outcome. With contract construction and contract disputes, it is useful to have experienced assistance. This can help with being fully protected throughout the process.