The answer – it depends. The general rule is that in order to be enforceable, contracts do not have to be in writing unless they are required to be in writing by law. So, what constitutes a contract?
The basic elements of a contract are:
- Offer – a party promises to do (or not do) a specified action in the future.
- Acceptance – another party explicitly accepts the offer in some manner, such as in writing, orally or performance. The acceptance must mirror the terms of the offer.
- Consideration – something of value is promised in exchange for the terms specified in the offer.
- Meeting of the Minds – the parties to the agreement understand and agree to the basic terms of the contract.
A contract can take many different forms. It can be one single written document, it can be a series of documents taken together, it can be handwritten, the result of a conversation, or transmitted via email, a website, carrier pigeon or otherwise.
Every state in the United States, with the exception of Louisiana, has a law or laws requiring certain contracts to be in writing in order to be enforceable. These laws are collectively referred to as the Statute of Frauds. In Pennsylvania, here are some of the common types of contracts that must be in writing according to statute:
- Purchase of real estate or transfer any interest in real estate
- Leases for more than three years
- Promises to answer for the debt of another
- Sales of goods for $500 or more
- Sales of personal property for $5,000 or more
- Leases of goods for $1,000 or more
Even if a contract is not required to be in writing in order to be valid and enforceable, I recommend drafting a written agreement between the parties that describes the rights and obligation of each person or entity. Contracts are for the protection and benefit of both parties, and having it in writing and signed will hopefully avoid conflicts in the future about the subject matter of the agreement.
In order to avoid common contract drafting pitfalls and unintended consequences, consulting an experienced attorney is a must. If contracts are used often in your business, it is worth reviewing them periodically in order to address changes in the law or issues that have arisen that may not have been addressed by the original draft of the contract.