Instruments in writing: Overview, definition, and example
What are instruments in writing?
Instruments in writing refer to formal, written documents that record or formalize an agreement, obligation, or transaction between parties. These documents can include contracts, promissory notes, deeds, and other legal agreements. An instrument in writing is typically executed (signed) by the parties involved and serves as proof of the terms and conditions they have agreed to. These written instruments are legally binding and can be used in court to enforce the rights and obligations of the parties involved.
For example, a business partnership agreement signed by two entrepreneurs outlining the terms of their partnership is an instrument in writing.
Why are instruments in writing important?
Instruments in writing are important because they provide clear, formal, and legally enforceable records of agreements. They ensure that all parties understand the terms and obligations involved in a transaction or contract and can be used as evidence if a dispute arises. By having agreements in writing, parties can avoid misunderstandings and ensure legal protections are in place.
For businesses, instruments in writing are essential for protecting intellectual property, outlining employee responsibilities, securing financing, and managing other key legal relationships. They provide clarity and security for all parties involved, reducing the risk of misinterpretation or fraud.
Understanding instruments in writing through an example
Imagine two companies enter into a contract for the sale of goods. The contract details the quantity, price, delivery terms, and payment schedule. Once both companies sign the agreement, the written contract becomes an instrument in writing. If one of the companies fails to meet the agreed-upon terms, the other company can refer to the contract to enforce their rights in court.
In another example, a business owner borrows money from a bank and signs a promissory note that outlines the loan amount, interest rate, and repayment schedule. The signed note serves as an instrument in writing, and the bank can use it to enforce repayment terms in the event the business owner defaults on the loan.
An example of an instrument in writing clause
Here’s how an instrument in writing clause might appear in a contract:
“This Agreement constitutes an instrument in writing and shall be binding upon the parties upon execution. All amendments or modifications to this Agreement must also be in writing and signed by both parties to be valid.”
Conclusion
Instruments in writing are fundamental to the legal system and business operations. They formalize agreements, ensuring that all parties involved understand their rights and obligations. Whether used for contracts, loans, deeds, or other transactions, these documents provide security, clarity, and legal enforceability.
For SMB owner-managers, understanding the importance of instruments in writing is essential for establishing strong business relationships, securing financing, and protecting the company’s interests in legal matters.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.