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Growth Strategies

Putting Your Oral Agreement in Writing

A reliance letter can put teeth in an oral agreement.
- Magazine Contributor
2 min read

This story appears in the June 2006 issue of Entrepreneur. Subscribe »

It's not that oral agreements aren't as binding as written ones. They're just much harder to prove.

So when you can't get it in writing, a reliance letter is a good second choice. Simply send your opponent a letter confirming the terms of your oral agreement with a legal hook at the end: "If this letter is not consistent with your under-standing, please notify me in writing immediately." It warns the other side that you're about to spend time and money or lose other opportunities because of your deal. Now the onus is on them to tell you otherwise. The longer they wait to respond, the more you "relied" and the more binding the deal becomes.

It's wise to give them a deadline to notify you to the contrary and copy people on your letter for backup. You could also soften the language: "Please let me know if I haven't described our deal accurately." A well-executed reliance letter is a real sleeper. Luckily, it's simple to counter one: Always set the record straight when you receive an inaccurate communication.

Great file-keeping is also a must. Take fresh and accurate notes of events and conversations. Preserve evidence. Hold on to all paper-work, and keep track of photos, witnesses, videotapes and physical evidence. These habits will not only strengthen your negotiating, but also position you well for any lawsuit.

A speaker and attorney in Los Angeles, Marc Diener is author of Deal Power.

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