A signed agreement is a modern day blood-oath. Okay, that’s an exaggeration, but it doesn’t change the fact that you (almost) always need a contract when your business or money is involved.
Most of us do business transactions on the basis of hand shakes. We exchange obligations, duties, and even money without creating the necessary contracts to act as evidence of such exchanges. We rarely regard such actions as risky because half the time, things go as we planned. But what about the other half of the time, when such agreements do not go as we planned? Many of us lack the ability to foresee the future and so we are not able to predict the future of any relationship/agreement. This is the major reason why we need signed agreements.
When we find ourselves involved in business transactions such as engaging someone to script an upcoming documentary or hiring a friend to manage the business side of a tour, we often fail to define the terms of such transactions. There is rarely any clarity as to the responsibilities and obligations of each party. As a result, each person does things as custom dictates or as she deems fit, and these actions might not meet the expectations of the other party. The dissatisfaction this generates is often the root of dissensions that lead to the ultimate breakdown of the relationship/agreement. To avoid this problem, endeavour to draw up a contract that clearly states the duties and obligations of each party to the agreement.
An agreement also precludes certain presumptions of law. I will explain. A presumption of law is a presumption based upon a policy of law or a general rule and not upon the facts or evidence in an individual situation. For example, the presumption of partnership may arise where persons do business together and share profit. In this situation, the law will also presume that they will share profits and losses equally. You can remove yourself from these presumptions by drawing up an agreement which states the terms of your transaction, and signing that agreement.
For creative folks, intellectual property presents its own set of unique problems. When entering into a contract which deals with the creation, management, or transfer of intellectual property, it is best to include clearly written terms which would govern the ownership and extent of control of the intellectual property. This is another reason why you should create that signed, written agreement.
An agreement prepared by a professional will also prevent you from running afoul of the law. For example, an under-aged person may only contract for necessaries. If you enter into a contract with 13 year old Tunde for the sale of a sculpture, that might turn out to be an invalid contract. This is why it is not advisable to use templates off the internet as they usually aren’t in tandem with Nigerian law and they often fail to explain considerations which you must factor into the draft. Please, bear in mind that the above is only a simple illustration. There are certainly more complex legal situations in which you may find yourself if you do not consult a professional to prepare an agreement for you.
Finally, when you draw up an agreement, you minimize the manifestation of disputes thus saving the resources that might have been expended in a bid to resolve such disputes. This is because the clearly defined terms of the agreement serve as a reference point for the parties and reduces the incidence of arguments which usually arise from disagreements as to the terms of the contract.