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									                                         The Law Offices of
                                    DAVID J. SUTTON, P.C.,
                          ------------------------------------------------------

                 When Can Oral Agreements Modify Written Contracts?
Mr. Small Businessman and Mr. A. Client reached an oral agreement and later put the agreement into
writing. When a dispute arose over what they had agreed to, Mr. Businessman filed suit. At trial, will the
court allow him to introduce the oral agreement into evidence to prove what they had agreed to?

Timing Is Everything

Whether a court will allow into evidence an oral agreement that modifies or conflicts with a written
agreement usually depends on when the oral agreement was reached. Courts generally disallow an oral
agreement that precedes a written document. Courts assume that when parties reduce an agreement to
writing, all previous oral agreements merged in the writing. The resulting written contract cannot then be
modified or changed by evidence of preceding oral agreements, absent mistake or fraud in the
preparation of the writing.

This requires the court to inquire into and determine the parties’ intent. When a contract does not express
the parties’ complete agreement and understanding, a court may consider previous oral communications,
but only to explain the meaning of the contract -- not to vary its terms.

Later Oral Agreements

What if the original written contract precludes any oral changes? In most states, the courts allow parties
to alter or modify a written contract by later oral agreements. But only if the parties show that they
thought they were entering into an enforceable oral agreement. This is because courts usually hold that
parties to a contract should be free to modify their agreement with consent of all parties at any time in
any way they see fit.

Some Agreements Must Be in Writing

Agreements that must be in writing to be enforceable include marriage proposals, agreements that cannot
be performed within a year, the sale of land or granting an interest in land for longer than a year, and
certain guarantee agreements. Good business practice would suggest always putting agreements into
writing in case enforcing them in court becomes necessary.

As a practical matter, legal counsel when reviewing contracts usually insert a clause stating that the
contract represents a final expression of the parties’ intent. Such a clause would typically read: “This
agreement sets forth the entire understanding of the parties hereto with respect to the transactions
contemplated hereby. This agreement supersedes all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral.”

If your business needs help with contracts, please call us. We would be glad to suggest ways to meet
your needs.

								
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