No more tears at bedtime

IT was Sam Goldwyn (the sage of Hollywood) who warned us that ‘oral contracts are not worth the paper they are written on!’.

It may seem officious and pedantic to put it in writing, but it can avoid tears at bedtime.

Without a written agreement, the parties are more likely to dispute the terms agreed, or even to deny that there was even an agreement.

Simply being able to cast doubt on the validity or terms of an agreement can put you in a stronger position in any negotiations.

The less documentary evidence available, the more importance will be attributed to witness evidence.

What if one of the parties has died and is no longer able to give their side of the story?

Mr X was a successful businessman who died in the middle of a business venture with Mr and Mrs Y.

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They had not written down the precise terms of their agreement. Following Mr X’s death, there was the inevitable dispute between his estate and Mr and Mrs Y.

The three had been looking to develop farmland owned by Mr X’s personal company. Mr and Mrs Y ran the farm for Mr X. After he died, Mr and Mrs Y argued (1) that Mr X had promised them the farmland in return for their efforts in developing the farm and (2) that Mr X had given them some money and written off other loans to them in lieu of salary.

The case turned largely on witness evidence – one of whom was of course no longer alive to give evidence.

The court found Mr and Mrs Y to be unreliable.

Indeed, the court said Mr and Mrs Y were ‘inherently untruthful people’ and the gross discrepancies in their evidence ‘strongly indicated that they had manufactured their cases in the belief that they could not be gainsaid in the absence of Mr X’.

On this occasion, Mr and Mrs Y lost both arguments resoundingly.

However, perhaps that was the wrong result.

Perhaps their version of events represented in part or in full the true agreement between them and Mr X?

Mr X died in January 2009.

It is possible Mr and Mrs Y saw an opportunity to bring false claims because (1) there was no written agreement and (2) Mr X was not alive to defend these claims.

All of this could have been avoided by getting the lawyers to draw up a proper agreement at the outset.

Although Mr X’s estate was successful in court, it took three and a half years for the case to be decided, meaning unnecessary costs, stress and delay for Mr X’s executors and beneficiaries.

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