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Contracts - Not Just a Handshake

July 29, 2019

 

     The laws and culture differ from one place to another.  What is normal and routine in one area is often incorrect in another.  For example, in the New York metropolitan area, the legal culture differs from Texas. There was once a verbal multi-million dollar deal between oil companies that was held by a Texas jury to be enforceable based upon a handshake.  Image the sale or purchase of a home or apartment building being based upon a handshake or a verbal agreement. What are the terms of the agreement?  Who heard those terms?  Do those who heard the terms all agree with one another as to the facts? Memories fade over time and are often not accurate.  Do those who heard the agreement have any agenda to say the terms of the deal agreed upon were better for the buyer or seller?

     Since verbal agreements are fraught with a multiplicity of various issues, both evidentiary and factual, here in New York, the General Obligations Law, Section 5-703, requires that conveyances and contracts concerning real property within New York State must be in writing.  There must also be consideration, usually a monetary deposit.  By requiring that the terms of the contract be  written, the chances of a dispute as to what was agreed upon are significantly reduced.  Is the chandelier in the dining room to be included in the sale of the house?  Are the washer and dryer to be included?  Is the roof guaranteed to be free of leaks?  Is the house a legal one family dwelling?  For commercial buildings, are there environmental concerns that need to be addressed so that the purchaser can cancel the purchase of the property and get their down payment back if contamination is found to be present?  These and other points are addressed in a written contract, and cannot be easily disputed when a contract is in writing.  This is not to say that the terms of a written contract cannot be challenged.  However, due to the fact that the terms agreed upon have been reduced to writing, the chance that they will be successfully challenged are greatly reduced.  That is why it is so important to review the terms of the contract, whether you be a purchaser or seller, with your attorney.  It is important to account for all contingencies so that the likelihood of litigation, which can take years at great expense, does not take place.

 

 

 

 

 

 

Prior results do not guarantee a similar outcome. All information posted is general advice only, based upon the rules of NYS, and is not intended to be a substitute for personal legal advice. Although information provided here was accurate as of the date of posting, laws change frequently and rules in other jurisdictions may differ. Therefore, readers should not rely upon these postings but should consult an attorney to discuss their specific factual situation.

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