Advantages & Disadvantages of a Written Contract

Written by marcus paine
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Advantages & Disadvantages of a Written Contract
Written contracts enable parties to look back at terms and conditions whenever necessary. (Jupiterimages/ Images)

A written contract is a legal agreement between two or more parties. Both parties, or their representatives, must sign the agreement. Anyone who is above the age of 18 and is mentally stable can enter into a contract.

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Terms and Conditions

A business contract states the terms and conditions of all agreements and transactions. If two people are entering into a contract, then the contract must clearly explain the roles and responsibilities of each person. Spelling out such details in this way helps to avoid any misunderstandings that may arise later in the partnership. With a written contract, both parties are more likely to discuss and come up with extremely comprehensive terms and conditions than if they just had a verbal agreement.

Legal Enforceability

Technically, both oral and written contracts are legally enforceable. However, with oral contracts, one or both parties can forget or misrepresent a few facts. In other words, oral contracts are willy-nilly, leading to a lot of he said, she said objectivity. With a written contract, everything is spelt out very clearly, so a court of law can resolve these disputes.


In some cases, a request to enter into a written contract can imply that one person distrusts the other. This implication is particularly true in situations where people rely on goodwill and mutual trust to conduct transactions, or if the two parties have a long-standing business relationship. Asking for a written contract can jeopardise the working relationship.

Cost and Paperwork

Written contracts are not always simple to draft. A layperson who drafts a written contract may make some errors or omit some important information. In some cases, a party may have to hire a lawyer to help draw up the contract. It can take up a lot of time and cost a lot of money for individuals and small businesses to implement for every agreement.

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