A bitter dispute between two former friends seems to be taking a rather nasty turn as it reaches its third year in federal court. Brendan V. Sullivan III and Robert Elwood are currently fighting over ownership of one of the most profitable youth sports camps in the country: Headfirst Camps.
Sullivan alleges that Elwood was merely an employee, while Elwood is adamant that they were partners in the business. It’s a situation that could be remedied by simply looking at the agreement made by the two men when they first went into business together. However, therein lies the problem: the agreement was verbal and never formally written.
An agreement between friends
Contract disputes are a common issue that business owners may face, but it is almost always in writing. Most of the time they involve aspects of the business like the offering of services or issues with payroll, standard elements and practices of the business. They rarely include some of the more bizarre practices that Elwood alleges were acceptable in their partnership, such as using large amounts of company funds for personal use.
It is unusual for such a massive agreement-the ownership of a business-to remain as an oral contract for so long without being written down. Oral contracts are largely informal agreements that are dependent on the people who have agreed to them. Any party involved can misinterpret or change their mind as to what was agreed upon without documented evidence to support or contradict them. Without witnesses, an oral contract is rarely seen as legally binding and is incredibly difficult to enforce.
From an oral contract to a written one
Even when an agreement begins as an oral contact, it often progresses into a written contract as a partnership, business, or organization progresses. From a legal and business standpoint, contracts that are in writing will hold more sway than those that are not. It’s a physical piece of evidence that either party can refer to in the event of a dispute such as the Sullivan vs. Elwood case.
An oral agreement may work on a baseball diamond, but a written contract is the way to go when things move off the field. If any part of their agreement had been written down and properly verified by witnesses and/or legal assistance, both men could have potentially saved themselves a lot of time, money, and frustration.
There are actions and steps that you can take to protect yourself from messy contract disputes, both oral and written. Seeking out the appropriate guidance can help you avoid such issues and protect yourself and your business interests. Contact a qualified business law office for a consultation to find out what you can do for you and your business.