It is surprising to me that, in a modern rules based society with such a well resourced and competent judiciary, anyone should ask this question. But there is a perception that documented agreements are not worth the paper they are written on. I suspect that the cynicism comes from those who, without the necessary skill and knowledge, attempt to document their own transactions or affairs, confident that they can do as good as job as any lawyer, but never entirely convinced of it. Self-belief is a good thing and people are free to have a go. They should, however, recognize that documented agreements that are legally binding will be enforced by the Courts even though, very occasionally, an agreement is set aside because of surrounding circumstances, such as undue influence, duress or deceptive conduct.

Whether an agreement will or will not stand up in Court pre-supposes of course that an agreement exists at all.  If one does, it’s then necessary to consider if the law will view it as legally binding in nature.

If an agreement is documented, the task of deciding if an agreement exists is really quite straight forward and that is why agreements should be documented. One reads the document to learn who the agreement is between, its subject matter, terms and duration.

If the agreement is not documented but verbal (sealed with a handshake, like in the old days), there is always a degree of uncertainty about the agreement simply because each party has a unique potential to recall the details of their conversations. The essential terms of the agreement will be difficult to prove if one party disputes that there ever was any agreement reached.  In cases of “he said, she said” Magistrates have been known to hold that no agreement was reached because the evidence about it is too unreliable. It is a truism that the details of a verbal agreement are notoriously hard to prove if there is conflicting evidence about what was said to whom.

A ‘legally binding’ documented agreement or ‘contract’, on the other hand, is one that is enforceable in a Court of law.  But to be binding and enforceable, certain legal rules have to be met.  At law school, these rules are taught in a yearlong subject called “Contract Law” and they are extensive and complex.

Anyone who genuinely doubts if a documented agreement will ever stand up in Court is most likely, however, to be alluding without consciousness to one such rule and it is this: A contract will fail (not be legally enforceable) if the language is too uncertain or if any part of the agreement is incomplete in an important respect, for example, the price of the horse for sale is unstated, or the appointed breeding stallion is not alive, or the scope of the work to be done is not defined. Someone who is not proficient at written expression will harbor a doubt about the adequacy of his or her English usage. Someone who struggles to identify and fully evaluate the complexities and risks of a transaction (for example the sale of an embryo) and what might go wrong will worry that all bases are not covered.

These doubts and worries seem to underpin the questioning of the validity of self-prepared documented agreements. Unfortunately, the baby gets thrown out with the bathwater and all documented agreements, however expertly written and comprehensive, are contaminated with a belief that they will never be good enough to bind someone. It is ignorant and a mistake to malign written agreements generally just because documenting an agreement might be hard for the average person to accomplish successfully. It should also be said that it is erroneous and extremely foolish to think that putting a signature to an agreement means nothing!

Every agreement involving personal property (like a horse, horse float or truck or items of tack) or horse related affairs (like horse agistment, training or breeding) must at least clearly address the identity of the parties, the price and the item of property or scope of the activity involved. Anyone undertaking the task of documenting these matters should be mindful to address them and be careful to express them with precision and clarity.  It is not good enough, for example, to say that the sale price of a horse is “to be agreed” or that the buyer of the horse is “Do It Yourself Pty Ltd” if no such company is registered. Courts will interpret the language used by non-lawyers, however, broadly and fairly to reach a reasonable meaning as to what the parties objectively intended.

What is more troublesome though for most people is documenting all the terms that are essential in any given circumstances. This is the real challenge for non-lawyers and even for lawyers without deep and wide experience of horse transactions and affairs. It is the fear of omission of something essential that had to be included in the agreement for it to be complete in a legal sense.  While not all eventualities can be sensibly addressed, it is possible for something essential to be overlooked entirely such as to render the agreement legally unenforceable. An example would be the case of an agreement by 2 people to breed horses without addressing acquisition of a broodmare or access to one!

The process of documenting an agreement helps to clarify each party’s ideas and expectations and to focus on what’s important. This is very beneficial.  For peace of mind, after having a go at documenting the essential terms of the agreement, a lawyer can ensure it is comprehensive and watertight.

11 June 2019

© 2019 Michael Mackinnon, Solicitor & Independent Counsel