A great many disputes come about either because the parties involved didn’t have a written agreement which set out what was expected of them, or because one or both parties didn’t fully understand what they agreed to.
A clearly written, signed agreement can give you certainty on what to expect from each other. While a verbal agreement can also be valid, the latter relies on your ability to remember clearly and objectively what was agreed to. If either of you doesn’t fulfil their side of the agreement it will be easier to have the dispute settled if your agreement is in writing.
It is mandatory at the start of any new employer-employee relationship, to have a written employment agreement which is signed by both employer and employee.
If you are an employee, you would still be entitled to minimum employment rights under the Employment Relations Act and the Holidays Act even if you don’t have a written employment agreement - but independent contractors don’t have this protection. If you are an independent contractor it’s all the more important to have a written agreement that covers what kind of work you’ll be expected to do, your work hours, pay rates and so on.
Paying for services
If you’re thinking of getting work done around the house, for example, you probably already know the value of getting perhaps three quotes from different service providers.
It’s best to get those quotes in writing, preferably broken down into the separate components such as the hours of labour and parts required to complete the work. Not only will this make it easier for you to compare the quotes, but if you go ahead with one of them it can prevent a dispute later on over the agreed work or price.
It’s also important to understand what’s in any standard consumer contracts you sign - for example, for your electricity or gas supply, gym membership or telecommunications plan.
Other situations where you can unwittingly get yourself (or someone else) into trouble because you didn’t have a written agreement include:
- getting into a dispute with a friend or family member over a private loan because you didn’t clearly set out and record the conditions of the loan
- failing to get your Will sorted out before you die, so that the people you care about may have to go to court before they can benefit from your estate.
Understand what you are signing up for
Of course, you would be wise to ensure that you understand and accept all of the terms and conditions in the agreement (including the small print) before you sign it.
Be sure to ask questions (from the service or credit provider or a lawyer, depending on the type of contract) to confirm what you think the terms and conditions mean and to clarify what you don’t understand. It might prove useful in a future dispute if you take notes when you do this.
Some examples of the type of disputes and problems that can result from not fully understanding what you’ve signed include:
- agreeing to be a guarantor for someone without fully realising you’ll become liable for their debt;
- continuing to pay instalments on a purchase long after you have paid off the full price of the goods, because you didn’t know to cancel your direct debit;
- buying something on credit and paying far more than expected because you didn’t read about the added fees, interest and penalties
- buying the wrong kind of insurance or inadvertently breaching a condition of the policy, because you didn’t understand your insurance policy.