There is a common misconception in the world that all agreements must be written in order to be valid and enforceable. However, oral agreements, or even behavior suggesting an agreement of the parties can be and are enforced. For instance, written partnership agreements are generally not required. Many states have adopted the Uniform Partnership Act or UPA. A partnership may exist whenever two people decide to go into business together and start operating as a business.
Because a partnership can be formed so easily, business agreements often include a clause similar to this: “This agreement is not intended to create, nor shall it be construed to be, a joint venture, association, partnership, or other form of business relationship. Neither party shall have, nor hold itself out as having, any right or power of authority to assume, create, or incur any expenses, liability, or obligation on behalf of the other party.”
Lawyers include this legal jargon because partnerships are regularly created without written documentation. So what is the advantage of having a written agreement? The most obvious answer is that by putting it in writing, you can always read what was agreed upon and it can resolve many disputes. I think you would be surprised by the misunderstandings that arise, even among the best and most amicable business partners. Written agreements can generally resolve issues quickly and efficiently and get the parties back to business. Without a written agreement to refer to, parties may harbor negative feelings and resentment that hinder the business operation. It is easier to protect your business and your business relationships if all terms agreed to are well thought out and in writing for everyone to refer to as issues arise.