The days of verbal agreements, gentlemen's agreements, and spit shakes are long gone. Entering into a contract with someone without the written word is just short of business suicide.

The reason why contract laws are drawn up all the time is that people find ways in which to get out of their commitments. Although not everyone is a shark, here are some reasons why verbal commitments should be avoided.

Sheep in wolves clothing

There are many shady characters out there and as technology has developed, so has the sophistication of duping unsuspecting victims. These guys are wordsmiths and will often have the numbers to back their claims. They could even show you fabricated reports that look like the real deal, but doing your due diligence is never optional, no matter how legit a company might sound.

To get the best business credit reports, you need to enlist the services of MyAccredit.com. With a quick search, you could pull the credit reports of any company from several repositories. If the numbers do not add up, then you are probably dealing with someone who wants to con you. A binding contract will let these characters think twice before taking a chance with your company.

Situations change

Although a verbal commitment seems like a good idea at the time, 2020 taught us that no financial situation is ever 100% secure. Within weeks, many companies were forced to their knees with the world going into lockdown.

Those who did not have enough reserves and were not able to differentiate, tanked and took other companies with them in the process. A verbal commitment is not going to hold any water when the pressure is on.

When situations change, for better or worse, a commitment should be backed by a contract to ensure that services are still being delivered. If the contract is broken, then an alternative arrangement can at least be made. A verbal agreement leaves a back door through which people can retreat unscathed.

People misunderstand each other

Verbal commitments leave room for misunderstandings and misinterpretations. Although the crossed lines are not deliberate, expectations can be interpreted differently when a commitment is verbal alone.

The wording gets lost with time someone is bound to forget a detail and that is when situations become tense. Written contracts are there to avoid these situations. When someone forgets what their obligations were, they can be reminded of the physical contract.

Termination of services

Verbal contracts and commitments have no foundation as such or binding power, which means that someone can pull out of a commitment at any time. Similarly, your company could be bound to deliver even if the conditions of the contract are not met, which leaves your company exposed to all sorts of disputes and claims.

On the other hand, a written contract will always stipulate when and under which conditions a commitment or contract can be terminated. All the fine details will be captured and can be used if necessary.

Promises of quality

People’s definitions of quality and warranty differ. A verbal commitment is like a net, trying to catch the wind, there are too many holes. Warranties are a particular headache because the mind is a powerful thing and can change the past to suit your ends. A warranty serves as a promise and a remembrance.

When a warranty is drawn up, it often stipulates the original condition or the state of affairs under which a contract was signed. It then goes further to stipulate the commitment of the supplier or service provider and a response to when the commitment is not met.