A contract is an agreement between two parties. Those parties may be individuals or business entities. In Arizona, a contract may be written or oral.
If one of the parties fails to perform on the contract, that party is deemed to have breached the contract and may be sued.
If the breach of contract occurs on a written contract, the party that has breached the contract may be sued for a period of six years after the breach occurs. If the contract is an oral agreement, the party that has breached the contract may only be sued for a period of three years after the breach. The period of time that a party may sue for a breach of contract is called the “statute of limitations”.
It is always in the parties’ best interests to put a contract in writing and have it signed by both parties. Then, if there is a breach of contract there is no question as to what the terms of that contract were and why they have been violated.
In the case of an oral agreement, it is harder to prove the terms of a contract if the parties’ are not in agreement. When there is a written contract between the parties, the contract is considered to be the full and final agreement between the parties. In short, the written contract contains all of the terms that the parties agreed to and none of the parties’ prior negotiations resulting in the written agreement are admissible in a court proceeding.
Succession planning... something likely of concern here.....
We suggest having a review of your transactions... BEFORE problems arise!
Here is information that will help you decide on having a written or verbal contract.