About David K. Staub Expertise I am a business and tax attorney and have spent more than 30 years assisting people with contracts in a wide variety of business situations. I can answer questions about basic contract issues. My experience includes almost all common contracts including employment agreements, contracts for the purchase and sale of a business, shareholder agreements, partnership agreements, LLC operating agreements, leases, software development agreements, distribution agreements, franchise agreements, joint venture agreements and software license agreements, to name a few. I can also direct people to sources for answers to specific legal questions which cannot be answered in a forum of this nature.
Experience
Experience in the area I have been an Illinois business attorney for almost 30 years. I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.
Organizations Illinois State Bar Association;
Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Glenkirk Foundation (Trustee; Vice-Chairman/Strategic Planning); Association for Corporate Growth, Chicago Chapter; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi - President
Publications Commerce Magazine; YLS Journal; ISBA Section of Taxation Newsletter
Education/Credentials Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974
Disclaimer Responses are intended to be informational only. No response is intended to constitute legal advice or create an attorney-client relationship. Online advice is not a substitute for consultation with an attorney.
Question Had an insurance agent ask to become a part of a new marketing tool. Commission splits and terms were agreed verbally while a written contract was performed by our Corporate attorney. Several managers were involved in the instructions to the agent, and agent agreed verbally. Agent also signed a contract with a third party required to become a part of the new marketing tool, that he would never had seen if not asking to be involved. Prior to written agreements, the agent (one of 20 active and agreeing they uniformly understand our verbal terms) now wishes to terminate, and states that he only will adhere to written agreements. He is also ignorant enough to be calling Companies associates and disparaging the Company and its agents. I would imagine there is files of settled case law supporting verbal agreements and interference? Thank you.
Answer In most cases, verbal agreements are just as valid as written agreements.
There are some exceptions where written contracts are required in most states, such as agreements for the sale of realty. It does not sound like the arrangement with the insurance agent would fall within one of the usual exceptions, so the verbal agreement should be valid IF it is a complete and binding agreement otherwise.
There are two major problems with enforcing verbal agreements:
1. Without a written agreement, it is more difficult to establish what the terms of the agreement actually are. In this case, it sounds like you would be able to establish the terms by obtaining testimony from the other agents, but nothing is as good evidence as the written agreement itself.
2. In a verbal contract, there is a greater chance that the parties failed to reach a complete understanding. All of the key terms need to have been agreed upon. An "agreement to agree" is generally not enforceable, so if the parties left material terms to be handled in the anticipated written agreement, those missing terms may mean that the parties did not have an enforceable contract.
