From the Business of Business section of How You Can Avoid Legal Land Mines by Joseph S. Lyles (2003).
John, an older man, orally negotiated the terms of his employment contract with his new employer. He gave his employer’s representative a copy of a written contract that he wanted the employer to agree to. During his negotiations, the representative assured John that he would submit the proposed contract to his supervisor and they would provide him with a written contract with the same or similar terms. Of course, John never received the promised written contract, and he started working with the belief that his new employer had agreed to his contract terms.
What made having a written contract so very important to John was the nature of his business. He worked as a food broker and represented particular lines of food or brands. The producers of those lines tended to be loyal to their brokers, so the new employer knew he would gain those particular food companies as clients if he hired John.
The new employer later fired John and tried to give his lines to a new, younger broker. But his plan didn’t work because John’s lines (companies) refused to work with the new broker, so John was rehired a few days later.
The employer began making life difficult for John, whose health had been declining. Eventually, the employer pressured John to retire, but he also held onto John’s lines. John received nothing in return for those lines upon his retirement.
John was certain he was discriminated against because of his age, and that he was tricked into giving up his lines. Likewise, John was not compensated as fully as he had delineated in his contract proposal. Without a written contract, there wasn’t much John could do about his forced retirement. He couldn’t believe that at the end of his long career he had been so badly mistreated. But, if he had simply insisted on a written contract before he began working, he could have avoided this legal land mine.
The Lesson: Oral business contracts, especially oral employment contracts, are difficult to enforce. Always get important contract terms in writing.