Many business contracts must be in writing to be enforceable. However, not every business transaction needs to be in writing. Specifically, many contracts involving goods (“goods” is a broad term that includes basically anything other than real estate, money or services) must be in writing.
Generally, orders/contracts for goods that have a value of at least $500 must be in writing to be enforceable. The writing need not include every term and does not have to be perfect, but the quantity identified in the contract must be accurate. These contracts must be signed by the person against whom the deal is sought to be enforced or that person’s agent. Importantly, electronic signatures or a typewritten name at the end of an email message are usually considered “signatures” in this context.
Therefore, if I order $600 worth of furniture for my office, that order should be in writing. The retailer with whom I place the order will want some signature from me to ensure that I am bound to take that furniture at the time when I am expected to accept the furniture.
Of course, there are some common exceptions to this rule. The first exception applies when the goods are “specially manufactured” with individualization for the buyer, and the buyer does not cancel within a reasonable time and before the seller takes steps to prepare the individualized goods. For example, if my order for furniture for my office is for hand-made wooden rocking chairs with my law firm logo carved in each chair, I cannot lead the seller into making the items and later walk away due to the technicality of my not having signed anything before the seller started making the chairs.
The second exception applies when someone receives and pays for the goods that were ordered and delivered and has no legitimate reason for the return of the goods. The fact that the deal happened without a written agreement in the first place is not a ticket to be able to revoke the deal after the goods are accepted and paid for by the buyer.
Finally, the last exception frequently applies in the context of farmers who market farm commodities. Obviously, a farmer’s contract for the sale of corn, soybeans or wheat will often be for more than $500. The law excepts the writing requirement for contracts if the contract is between “merchants” of the products, and a written agreement is provided by one merchant to the other within a reasonable time after the verbal agreement was made.
Therefore, if a farmer places a telephone order to sell 10,000 bushels of corn to a local grain elevator, the farmer is bound to the agreement as long as the grain elevator provides the farmer with a written memorialization of the verbal agreement within a reasonable period of time after the verbal order.
This final exception, involving merchants, is particularly applicable in times like these when the prices for commodities like grain or precious metals can move by very large amounts very quickly.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.