Introduction

In the world of business-to-business (B2B) agreements, you might wonder if every deal needs to be written down to be valid. The short answer is no, but there’s more to it than that. Let’s explore when you can rely on a handshake and when it’s smarter to put everything in writing.

Read: What does executing a contract mean?

The lowdown on verbal agreements

In many B2B scenarios, a verbal agreement can be a valid contract. If you agree over the phone to supply a client with a batch of products and both sides are clear on the terms, technically, that’s a deal. But here’s the catch: proving what was agreed upon can be difficult if there’s ever a dispute. Without a written record, it’s your word against theirs, which can lead to messy misunderstandings or worse.

When you absolutely need it in writing

For certain types of B2B contracts, having a written agreement isn’t just smart—it’s legally required. For example, if you're based in California, this is where the Statute of Frauds comes into play, ensuring that significant agreements are clear and enforceable. Here are some situations where a written contract is usually necessary:

• Long-term agreements: If your agreement involves something that can’t be completed within a year, like a long-term service contract, you’ll need it in writing to make it enforceable.

• High-value transactions: When the deal involves large sums of money—typically for the sale of goods worth $500 or more—it’s wise to put the terms in writing.

• Guarantees and promises: If you’re promising to cover another company’s debts or obligations, this needs to be in writing. It’s a big commitment, and a written contract helps ensure everyone’s on the same page.

Read: How to update your contracts to increase profits

Why having a contract in writing is wise

Even if the law doesn’t require it, putting your business contracts in writing is often the best move for your business. Here’s why:

• Clarity: A written contract spells out all the details, so there’s no confusion about who’s supposed to do what.

• Proof: In case a dispute arises, having everything in writing gives you solid evidence of the agreement.

• Consistency: Over time, people might forget the details of the deal, but a written contract ensures that all the agreed-upon terms are remembered and enforceable.

Read: The pros and cons of using standard contract templates

Conclusion

So, does a business-to-business contract have to be in writing? Not always, but it’s usually the safer route. While verbal agreements can work for straightforward deals, when the stakes are higher, a written contract offers clarity, security, and peace of mind. In the business world, having everything in black and white is often the best way to ensure that both parties are on the same page and that the agreement is built to last.

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.