If you have ever watched an old movie, you will see where a handshake can close a deal. Gone are those days. While an oral agreement can be legally binding, it is best to commit your agreement in writing. The terms can be on a physical paper, or electronically in an email or on a website or anywhere that is considered in a permanent form.
There are always exceptions to the rule and some written agreements with additional terms stated orally or through conduct can be enforced. However, the prudent business person put all aspects of a deal in writing to avoid any misinterpretations of the terms.
A real estate developer recently found this out when he entered a purchase deal to buy a commercial building from DK Arena, Inc. (DKA). DKA put all the terms in writing and specified that all modifications to their deal must be in writing. Both the seller and buyer signed and executed the contract. The developer asked for assistance from DKA to secure zoning and when the assistance wasn’t to his satisfaction, he reneged on the deal. He claimed the assistance with local government regarding zoning was a part of the deal. DKA disagreed, called it a favor and sued for breach of contract. The Florida Supreme Court agreed with DKA in DK Arena, Inc. v. EB Acquisitions I, LLC, No. 10-897 (Fla. March 28, 2013). All matters concerning real estate must be in writing and this rule falls under a legal principle umbrella called “Statute of Frauds”. (The details of the case analysis represent several areas of law but for our purposes, we are focusing on contract negotiations.)
There are four (4) scenarios that must be in writing with signatures to be enforceable and they are as follows:
I. Contracts for the sale of real estate;
II. Contracts where one party promise to pay the debt of another;
III. Contracts that cannot be performed in less than a year;
IV. Contracts for the sale of goods that is $500 or more.
Bottom line is this simple. Anything that is material to the deal should be in writing. There is no equivocation to this rule.