This week in a Facebook group someone posted about a web designer they had hired, paid through PayPal®, and now wasn’t delivering. The website was late, she had missed deadlines, and the quality wasn’t what she expected. She was asking what she could do. Of course, the first question someone asked was did she have a written contract in place. Nope.
Of course this makes my heart drop a bit because without a written contract this woman will have a really hard time getting her money back. But then someone else brought up that an oral contract is just as legally binding as a written contract.
And I wanted to address that here. So the answer is...yes and no.
While an oral agreement (through a handshake, phone call, emails, etc.) is technically considered a legally binding contract if it has all of the ELEMENTS of a contract (offer, acceptance, intention to create a relationship, and consideration ($)) it is much more difficult to argue against in the case of a disagreement because it is basically a case of he-said/she-said.
In the case of a contract dispute, a court (or Paypal, other third-party, etc) will examine the evidence to support the claim. Without a contract, you are missing a big piece of #veryimportantevidence. You may be able to point to emails, witnesses, phone calls, etc. but these are not nearly as strong as having a written (signed) document or terms of purchase that the other person has agreed to.
Think of it this way if you are trying to get money back from PayPal (or Stripe, or whatever):
A. Hey 3rd party merchant! Susie Web Designer and I agreed that I would pay her $3K and she would give me an awesome 5 page website on WordPress by June 15. It’s June 20 and the website isn’t done and I don’t even like what she has done. I want my money back! I didn’t sign anything but in this string of emails it says she would give me this on this date.
B. Hey 3rd party merchant! Susie Web Designer and I agreed that I would pay her $3K and she would give me an awesome 5 page website on WordPress by June 15. You can review our written and signed contract (attached) where she agreed to these terms, including the clause that says if she doesn’t deliver on time or as agreed upon, that a full refund will be issued. Here is the domain (www.domain.com) and you can see that it is not a complete website, therefore, she has not met the terms of the contract and I am seeking my money back. Thanks.
In which case would you have an easier time getting your money back? Obviously in B, because not only do you have a written contract, but one that has a clear REFUND POLICY. Now, it’s not a guarantee the 3rd party will agree but you have a much stronger case.
You know the bottom line. Written Contracts for EVERYTHING.