Do I need that in writing?

A common misconception is that, in order to be an effective agreement, all contracts must be in writing and signed by both parties.  This is not true.  So long as the parties to the agreement are able or "competent" to enter into an agreement and so long as some type of value or "consideration" is exchanged, then many types of agreements may be effective upon a verbal exchange or with an unsigned writing.

photo credit: NobMouse

There are, however, some types of agreements that are ineffective unless they are in a writing signed by the party against whom enforcement is sought.  Such types of agreements are outlined in what is known as a "statute of frauds."  The Arkansas statute of frauds--located at Ark. Code Ann. § 4-59-101--includes agreements involving guaranteeing the debt of another, the sale of an interest in land, a lease in excess of one year, a personal services contract that is not to be performed within one year of the contract, among several others.

In light of the potential pitfalls involved in executing a contract, it is typically advisable to consult an attorney before entering into any type of legal agreement.  Everyone hopes that their agreements will work out, but a knowledgeable attorney can help you ensure that your contracts are enforceable in the event of a breach.

Attorneys Fees: The American Rule

Arkansas courts follow the "American Rule" with regard to attorneys' fees.  This means that, as a general rule, both parties to a lawsuit bear their own fees and costs.  To first-time litigants, this rule often seems unfair.  However, there are numerous exceptions to this rule involving statutes that permit a prevailing party to request judgment against the other party for fees incurred in the defense or prosecution of his or her case.   Fortunately, an experienced attorney can help his or her clients soften the impact of the American Rule by carefully crafting his or her client's claims so that they fall within these statutes.  Such claims include, for example:

photo credit: kbjesq

1. Actions for collection on an open account
2. Actions on a promissory note
3. Actions for breach of a written contract

There are many other causes of action where a statute allows the prevailing party to petition the court for his fees.  A business can also protect itself by inserting a mandatory fee provision in its contracts.  An experienced attorney can help your business maximize its recovery in litigation--including the recovery of fees spent protecting your rights.

Interest: How much is too much?

Clients often come to me with questions about maximum allowable interest rates.  A degree of confusion is understandable--Article 19 § 13 of the Arkansas Constitution previously provided for a variable interest limit depending on the type of contract and the Primary Credit Rate at the time of the contract's formation.

During the 2010 general election, Arkansas voters passed Arkansas Constitutional Amendment 89, which became effective on January 1, 2011.  Amendment 89 simplified Arkansas usury law by dividing loans into three categories:

photo credit: EJP Photo

1. Governmental bonds and loans now nave no maximum rate.
2. Loans by or to federally insured depository institutions headquartered in Arkansas are capped by 12 U.S.C. § 1831u
3. All other contracts subject to Arkansas law have a maximum allowable interest rate of 17%.

There are some pretty severe penalties for violating Arkansas usury law, which I'll cover in a future post, so you should always consult your attorney if you have concerns about an interest provision in a contract.