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Save time and money by documenting your transaction

Putting your agreement into writing, instead of just relying on verbal communication, makes everything clearer and reduces the risk of disputes.

You’re engaged in the lending business and just sealed the deal with a borrower for a substantial loan.  Because you want to save on legal fees, you don’t bother signing a Contract of Loan with the borrower and leave everything verbal.  A few months later the borrower defaults on his payments and you go unpaid. When you confront the borrower he denies ever having taken out a loan from you.  You’re forced to hire a lawyer and file a court case against the borrower to collect the unpaid balance of the loan.  

However, what should have been a simple collection case in your favor was instead made more complicated and extended by years, costing you substantial time and money, because you had to convince the judge that there was indeed a loan agreement, although verbal.  

The above situation is all too common for professionals and small-to-medium businesses.  For various reasons, usually to save on legal fees, they conduct their transactions without using a written agreement and rely solely on a verbal agreement.  Even when they do use a written document, they don’t exercise the necessary due diligence to ensure the written document accurately reflects the agreement. They do a quick Google search and use the first document they find which appears to be what they need.

Both of the above approaches will just ultimately cost you substantial time and money.  What you saved in legal fees will eventually come back to haunt you.  

Why you should use a well-written agreement

Not using a written agreement significantly increases the risk of disputes happening later on.  It is hard to rely on a verbal agreement because people can, innocently or maliciously, forget important details of the agreement.  This also increases the risk of confusion on what are the rights and obligations of the parties under the transaction. Worse, if the dispute becomes a full-blown court case, a party can simply deny the existence of the agreement because nothing is in writing. On the other hand, haphazardly using documents you find on Google is also a recipe for disaster.  The document you use may not accurately reflect what was agreed upon. The document may even contain terms which are harmful to you.

The best practice with any transaction, personal or business, is to always use a well-written agreement that sufficiently protects the interest of both parties.  The advantage of using a well-written agreement is that it clearly defines the rights and obligations of the parties and avoids confusion. This helps avoid and/or resolve disputes simpler and faster because the parties can simply refer to the written agreement to handle the dispute.  You also save on substantial legal fees because a lawyer’s intervention may be unnecessary.

Here on Legal Tree, you can create personal and business documents for a wide range of personal and business transactions anytime online within minutes.  All our documents are carefully reviewed and vetted by lawyers to ensure they comply with all legal requirements. You can also customize your document to tailor-fit it to your situation. This ensures that your document accurately reflects all the details in your agreement and the interests of both parties are fairly protected.

To know more about Legal Tree and our services, email us at inquiries@legaltree.ph or visit our website at www.legaltree.ph.