When Are Written Business Contracts Required in Arizona?
When you enter into a business contract, you want to make sure the agreement is legally valid. The State of Arizona has specific requirements that every contract must meet to be legally enforceable in an Arizona court. In addition to those criteria, state laws require some agreements to be in writing. If a law requires a contract to be in writing, an Arizona court will not enforce it, even in the event of a breach or dispute, if the agreement is not written.
What Makes a Contract Legally Enforceable?
Arizona laws require a contract to meet specific requirements in order for a court to enforce the terms of the agreement. We explained these requirements in a previous blog and provided additional detail in a second article about business contracts. As we discussed in those blogs, the basic requirements for a legally binding contract are:
- Offer and acceptance by the parties
- Mutual assent or intention between the parties
- Consideration (value exchanged) by the parties
- Legal capacity of parties
- Legality of purpose of the agreement
In addition to meeting these legal requirements, Arizona laws require some contracts to be in writing. If an agreement is required to be in writing but is only verbal, a party will not be able to enforce the contract in court if there is a violation of the contract terms and a dispute arises.
Arizona Statute of Frauds and Other State Laws
Statute of Frauds is a traditional legal term that dates back centuries. It refers to legislative enactments that require certain contracts to be in writing and signed by the parties agreeing to the contract. The purpose of these laws is to prevent fraud and injury, which explains the origin of the name.
Most individual states have adopted a statute of frauds, often along with other legislative acts that require certain contracts to be in writing. Arizona’s Statute of Frauds is found at ARS § 44-101. Arizona also has other laws which require specific contracts to be in writing and signed by the parties. Some of the common agreements that must be in writing in Arizona include:
- Real estate transactions, including leases that are longer than one year
- Contracts that cannot be performed within one year
- Promises to pay another person’s debt
- Marriage-related contracts, like prenuptial or postnuptial agreements
- Sales of goods valued at $500 or more, with certain exceptions (pursuant to the Uniform Commercial Code)
The types of contracts listed here are not an exhaustive list of agreements required to be in writing. There are also other Arizona laws that address written contracts. For example, A.R.S. § 32-1158 requires construction contracts in an amount greater than $1,000 between a contractor and property owner to be in writing and also requires specified other information listed in the law to be part of the contract.
It is important to note that electronic (digital) contracts transmitted and executed via email and electronic signatures can be considered to meet the “written” requirement when they comply with specific requirements in state laws relating to electronic transactions and electronic signatures.
If you are entering into a business agreement, it is always advisable to have the terms in a written document signed by both parties, even if the law does not require a writing. Having a lawyer review the contract before execution is also highly recommended, especially if the agreement is substantial or significant.
Why Every Contract Should Be in Writing
While some verbal contracts may still be legally valid if they are not required by law to be in writing, entering into any contract that is not in writing poses risks for the parties. If a dispute arises, proving the precise terms of the agreement may be very difficult.
Without a written record of an agreement, the parties’ recollections or interpretations may be different, and may even change over time. Important details may be misunderstood, forgotten, or neglected if they are not clearly stated in a written agreement.
Having a written agreement provides clarity and ensures that both parties understand their rights and responsibilities under the agreement. The document also provides specific evidence in the event there is a dispute over the terms. A written agreement detailing the terms of a contract makes a misunderstanding or dispute less likely.
When you enter into a business agreement, the best approach is always to insist on putting a contract in writing and having both parties sign it, rather than relying on a verbal agreement. In addition, it is also advisable to discuss and review the agreement with a knowledgeable business law attorney before you sign it.
Schedule a Free Consultation With an East Valley Business Law Attorney
In our business law practice at Peterson Law Offices, PLLC, our services include making certain that you protect your contract rights for all agreements relating to your business. We provide contract review for new agreements, as well as for standard forms and contracts you use in your business operations. We always provide high-quality legal services at affordable prices — and your first consultation is free of charge.
We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.
