Can Agreements Be Verbal? A Practical Guide to Oral Contracts
When it comes to legally binding agreements, most of us think of written contracts signed by both parties. However, verbal agreements can also be legally enforceable under certain circumstances. In fact, many agreements that we make in our daily lives are oral and binding, such as agreements made with friends, family, and colleagues.
In this article, we will explore the legal validity of verbal contracts, the circumstances in which they can be binding, and some practical tips for creating enforceable oral agreements.
What is a Verbal Agreement?
A verbal agreement, also known as an oral contract, is an agreement made between two parties without a written document. This could be as simple as a conversation between two people discussing a business deal, or it could be a more formal oral agreement made during a phone call, video conference, or in-person meeting.
Are Verbal Agreements Legally Binding?
As a general rule, verbal agreements are legally binding and enforceable, just like written contracts. However, the challenge with oral contracts is in proving the terms of the agreement and the parties` intent to be bound by those terms.
For a verbal agreement to be legally binding, there must be an offer, acceptance, and consideration (something of value exchanged between the parties). Additionally, the terms of the agreement must be clear, and the parties must have the capacity to enter into the agreement.
When Are Verbal Agreements Not Enforceable?
Even if all the elements of a valid contract are present, there are some situations where verbal agreements may not be enforceable. For example:
1. Statute of Frauds: In some states, certain types of contracts must be in writing to be enforceable. These include contracts involving real estate, marriage, and contracts that cannot be performed within one year.
2. Lack of capacity: If one or both parties do not have the legal capacity to enter into a contract (such as minors, mentally incapacitated individuals, or someone who is under the influence of drugs or alcohol), the contract may not be enforceable.
3. Misrepresentation or fraud: If one party made a false statement or intentionally concealed material facts that influenced the other party`s decision to enter into the agreement, the contract may be voidable.
4. Illegality: If the purpose of the contract is illegal, such as an agreement to commit a crime, the contract is void.
Tips for Creating Enforceable Oral Agreements
If you need to enter into an oral agreement, here are some tips to help ensure that it is legally binding and enforceable:
1. Be clear: Make sure that the terms of the agreement are clear and unambiguous. Use specific language and avoid vague terms.
2. Get it in writing: If possible, follow up with an email or letter summarizing the terms of the agreement. This can serve as evidence of the agreement`s existence and terms.
3. Get a witness: If possible, have a third party witness the agreement. This can help to provide additional evidence of the agreement`s existence and terms.
4. Record the conversation: If permitted in your state, consider recording the conversation. This can serve as evidence of the agreement`s existence and terms.
In conclusion, verbal agreements can be legally binding and enforceable, but they require proof of the agreement`s existence and terms. If you need to enter into an oral agreement, be sure to follow the tips above to help ensure that it is legally enforceable.