Legal Verbal Contracts: Understanding the Basics
Contracts are a fundamental aspect of business and personal relationships. They establish the terms of an agreement, outlining the rights and obligations of all parties involved. Typically, contracts are written documents that are signed by all parties involved. However, there are occasions when verbal contracts are made.
A verbal contract is an oral agreement between two or more parties. While they are not written down, they are just as binding as written contracts. The challenge with verbal agreements is that they are often difficult to enforce as there is no written record of the agreement. However, there are instances where verbal contracts are legally binding and enforceable.
The Essentials of a Verbal Contract
For a verbal contract to be legally binding, there are essential elements that must be met. These elements include:
1. Offer and Acceptance
The first essential element of a verbal contract is an offer made by one party to another. The offer must be clear and specific, outlining the terms of the agreement. The second essential element is acceptance. The acceptance can be verbal or through conduct. However, the acceptance must match the terms of the offer.
2. Consideration
Consideration refers to what each party is contributing to the contract. In a verbal contract, consideration can include money, services or goods. For the contract to be legally binding, all parties must have contributed something of value.
3. Intent
The third essential element of a verbal contract is intent. Each party must have the intention to create a legally binding agreement. If one party was joking or did not take the agreement seriously, then there may be no legal contract.
When is a Verbal Contract Enforceable?
Verbal contracts are legally binding when they meet the essential elements outlined above and when there is no statute of frauds. A statute of frauds is a legal requirement that certain contracts must be in writing to be enforceable. Examples of contracts that must be in writing include property sales, wills, and contracts that cannot be fulfilled within one year.
In addition, verbal contracts can be enforceable if they have been partially or fully performed. For example, if one party has already paid for goods or services, then it may be possible to enforce the verbal contract.
Final Thoughts
While verbal contracts can be legally binding, they are often difficult to enforce. This is because there is no written record of the agreement, making it challenging to prove the terms of the contract. If you are entering into a verbal agreement, it is important to document the terms of the agreement in writing. This can be an email or a text message that both parties agree to. This will help to ensure that all parties are on the same page and may make it easier to enforce the verbal contract should a dispute arise.