Florida Companies: Can You Do Business With an Oral Agreement?
Oral agreements are common in business and exist as the standard way of doing business for many single proprietors and small businesses in Florida. However, having a written contract has various advantages such as being more enforceable in a court of law.
Contracts also give you the ability to avoid disputes before they occur by laying out what is expected by both parties ahead of time. In all cases, it is wise to seek the counsel of an attorney when drafting a sales agreement or other contract prior to using it for your business.
Are Oral Contracts Valid in Florida?
In theory, Florida law accepts most oral contracts as enforceable. In practice however, it can be difficult to enforce a contract based on two separate parties’ recollection of what was said and what was meant by certain oral statements. It is always prudent to use a written agreement rather than an oral agreement when conducting business in Florida.
The preference and even requirement to use a written contract is well established in US business circles. In the Uniform Commercial Code, a set of generally accepted business norms on which most US state laws are based, Article 2 states that transactions over $500 must be binded by a written contract. Under Florida law, certain industries must use contracts for each transaction. These include, for example, those in the real estate, construction and insurance industries.
An experienced business lawyer can help you determine what needs to be in your written contract to make it legally binding and enforceable in a Florida court.
The first part of most contracts identifies the parties making the agreement. This includes their full business name and usually their registered addresses. Sometimes this portion of the contract also contains a date.
The second part of most contracts is called the offer. The offer contains a description of the goods and services to be delivered. In most complete contracts the offer includes other provisions such as the terms and conditions on which the offer is made as well as warranties.
In a third section of many contracts, the consideration is laid out. The “consideration” includes the fee for the service or goods described in the offer. It also includes payment methods, due dates and penalties for late payments.
The next section of many Florida contracts outlines the legal jurisdiction in which any contract disputes would be resolved. There are two parts of this section in most cases: “choice of law” and “choice of venue”. Choice of law identifies the geographical jurisdiction (usually the State of Florida and a specific county within the State such as Broward County or Miami-Dade).
Finally, most contracts contain a termination clause in which it is laid out how the parties can terminate the contract, for what reasons and when termination is permissible. This can be a set process of termination or simply that the contract expires on a given date.
Other provisions depend on various other factors that should be looked at in tandem with an experienced legal counsel. This may include confidentiality agreements such as non-disclosure agreements, non-compete agreements, other terms and conditions incorporated by reference. Having lawyer review your agreement, ensures that the elements that are specifically tailored to the needs of your business.
Seek the counsel of an attorney when drafting a sales agreement or other contract prior to using it for your business.
The part of the contract that makes it binding is the acceptance. This may be in the form of a signature of both parties or as an electronic signature generated by software. Either way, once accepted a contract becomes legally binding. Usually, this section includes a date and sometimes the signature of a third party witness to the acceptance.
The Importance of Legal Counsel
Before creating any legally binding documentation, it is recommended to seek the advice of an experienced legal professional to draft and review the documentation. At the very least, have a “legal eye” review your contract prior to using it in a transaction. This will ensure that your document protects your business and is compliant with Florida law.
Are you using documentation that has not been legally reviewed? Is your business conducted “on a handshake”. Contact us today to draft and review sales and other agreements. Call (954) 900-8885 or reach out via contact form by clicking here for a free consultation.
Burton Landau, Esq is Founding Partner of South Florida Law, PLLC. He graduated Cum Laude with a Master’s in Business Administration from the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University and his Juris Doctorate from St. Thomas University School of Law. Mr. Landau is fluent in Russian.