Once the company and applicant have agreed to key terms, it is impor- tant to confirm the deal in writing. Legal disputes often arise because many companies hire people on a handshake. The failure to spell out important terms often leads to misunderstandings and disputes. Even when key terms are discussed, the same spoken words that are agreed upon can have different meanings from the employee's and company's perspectives. Written words limit this sort of misun- derstanding.
Companies can benefit from the use of written contracts for other reasons.
Selecting the locale for the proceeding ahead of time can save your company unnecessary travel, related costs and hardship and may force the litigant to think twice before commencing arbitration that requires travel to a distant site. However, since the arbitration procedure is more streamlined than regular litigation and there is usually no right to appeal the decision, the agreement to arbitrate must be contained in a contract, typically an employment contract. Speak to counsel about the merits and pitfalls of arbitration if applicable. Another advantage of a written contract arises from the use of a restrictive covenant when an employee leaves the company. This is of particular significance to companies that train their own employees in a skill, only to lose them to a competitor.