Get it in writing to reduce the risk of litigation
By AdvocateDaily.com Staff
Silver, principal of Jeffrey C. Silver Barrister, explains that verbal contracts abound in the construction industry, where the key terms of a deal, including the price, the timelines and the materials to be used, are all typically reached during a conversation sealed with a handshake.
“If a homeowner hires a painter, they might verbally agree which rooms are to be painted, what quality of paint will be used, when the work is to start, and when it should be completed,” he says. “Having a written contract with these basic terms won’t eliminate the potential for legal problems, but it will reduce the uncertainty and put everyone in a better position from a legal standpoint.”
But in the absence of a formal written contract, Silver says getting the key terms of a deal down in writing can also significantly cut the chance of a legal fight. In the modern age, this is easier than ever, he adds.
“If you send a brief email, confirming the conversation, it gives you a written record,” Silver says. “If you complain about a purchase, and a representative of the company agrees to a refund, or if a bank manager offers to reimburse certain fees, then send a quick email to confirm what you were told. There are countless examples, but it’s the same principle.”
Without either a contract or written confirmation corroborating one side’s story, Silver says a judge will be forced to come to a decision based on an assessment of the credibility of each party.
“If he or she finds one more believable, then the judgment will go in that person’s favour,” he says.
For example, in one 2012 case, the judge sided with a bricklayer in a lawsuit against a homebuilder over four verbal contracts, largely because she favoured one principal’s viva voce evidence over another.
“There were purported cash payments made, but without any record whatsoever," says Silver. "A brief email confirming that such payments were made, and in what amount, would have eliminated that issue at trial.”
In one of his own cases, Silver was hired by a tradesperson to collect payment for work done on the front façade of a luxury property in the Bridle Path area of Toronto. Initially hired by a homebuilder, the worker continued the job with new instructions after the builder agreed to sell the property to a couple.
However, there was no written agreement that specified who Silver’s client was working for, and he was left shortchanged when the purchase was abandoned and neither wanted to pay.
“Everyone sued, and ultimately, a favourable result was reached for the tradesperson I was representing,” he says.
In another of his cases, Silver’s client had a contract for $2.5 million as part of a broader $125-million construction project. Another party produced a document, signed by the parties, that suggested a price change had been agreed, but it was scrawled on a scrap piece of paper, with writing in different coloured ink.
“The court gave no weight to the document, and so it demonstrates the need to put agreements in writing in the proper manner and format,” he says.
A third Silver case shows that it is possible for a credible plaintiff to convince a judge to side with them, even without written evidence of transactions.
His client had returned from Japan following the death of a family member with an inheritance in Japanese Yen and asked a local car dealer whether he would be able to pay for a new car in the foreign currency.
The buyer handed over the Yen without a receipt, but when he returned another day, the salesperson denied any knowledge of the cash, forcing Silver’s client to sue.
“It was a fascinating trial and fortunately the judge agreed the Yen was given to the dealership without much of a paper trail,” Silver says. “But if he had asked for a simple receipt in writing, it would have avoided the whole problem and there would have been no need for a lawsuit.”