There is no question that if contracting parties want to protect their interests, they should put their agreements in writing. The agreement does not have to contain any special legalese, but it should be clear and concise. It should describe what the parties’ expectations are of each other. It should be clear enough for a third party (say, a judge or an arbitrator, for example) to understand what the parties intended.
Basic English will suffice. For simple agreements, wording such as the following is a good way to begin a “letter of agreement” addressed from one party to another:
“Dear [Name of individual or company], this shall serve to confirm our understanding and agreement relating to [whatever the subject matter of the agreement is, such as, for example, “your distribution of our product in the territory of Ontario for (such and such a period)”] upon and subject to the terms and conditions set forth herein:….”
Then you set out the significant terms and conditions that apply. As well, the agreement should be dated and signed by the parties intending to be bound.
Of course, it is strongly suggested that you obtain the advice of a commercial lawyer to assist with properly drafting the agreement between the parties. However, as between no written confirmation and a written confirmation of the terms of an agreement, a written one should provide some evidence of the parties’ intention and, therefore, useful in a dispute involving a determination as to what the parties intended.
There are many rules applicable to the interpretation of agreements. Usually, there is a clause that states that the parties intend that the written document contains their entire agreement and that it supersedes and replaces all prior negotiations, promises, representations and agreements relating to the subject matter of the contract. That type of clause in an agreement is an attempt to prevent a party from alleging that there is more to the agreement than what is set forth in the document being scrutinized.
Often the provisions at the end of an agreement are called boilerplate or standard terms and conditions that are used over and over again in all kinds of agreements. These provisions are helpful and can prove extremely useful when a dispute arises. It is often the case that informal written agreements do not contain such boilerplate provisions and that can work to the disadvantage of one or more parties to the agreement.
If you are a contracting party, you do NOT want to end up fighting in court to resolve a dispute about the interpretation of an agreement. See my earlier blog about the nightmare of going through the court system to resolve a dispute. In most cases, if clarity is what is desired, it is much better to be as clear and concise as possible with a written document at the outset. It makes the most sense to obtain the advice of a lawyer before hand; you may very well pay exponentially more if a dispute arises down the road.