Verbal Contract is Legally Binding: Understanding the Basics
When you think of a legal contract, you may picture a lengthy document with numerous clauses and legal jargon, signed by the parties involved. However, not all contracts are in writing. In fact, verbal contracts are legally binding in many situations. But what exactly is a verbal contract, and how can you ensure its enforceability?
What is a Verbal Contract?
A verbal contract, also known as an oral contract, is an agreement made between two or more parties through spoken words, rather than through a written document. Verbal contracts can be formed in a variety of situations, such as a business deal, a job offer, or even a social agreement. They can be as simple as an agreement to meet for lunch or as complex as a contract to sell a house.
What Makes a Verbal Contract Legally Binding?
To be legally binding, a verbal contract must meet the same essential elements as a written contract: offer, acceptance, consideration, and intention to create legal relations. Let`s break down each of these elements:
Offer: One party must make an offer to enter into a contract. The offer must be clear and specific, and it must contain all the essential terms and conditions of the agreement.
Acceptance: The other party must accept the offer, either verbally or through conduct that implies acceptance. An acceptance must be unambiguous and clear.
Consideration: Both parties must exchange something of value, such as money, goods, or services. This ensures that each party gains something from the agreement.
Intention to create legal relations: Both parties must have a genuine intention to create a legally binding agreement. This means that the parties must intend to be legally bound by the terms of the contract, even if it`s not in writing.
Enforcing a Verbal Contract
If a verbal contract meets all the essential elements, it is legally binding, just like a written contract. However, enforcing a verbal contract can be more challenging than enforcing a written contract, especially if there is a dispute over the terms of the agreement.
To ensure enforceability, you should take certain steps when entering into a verbal contract. These include:
1. Document the agreement: Even though the contract is not in writing, it is still essential to document the terms of the agreement. This can be done through email, text message, or by writing notes of the agreement.
2. Include important details: Make sure that all the essential terms and conditions of the agreement are discussed and agreed upon. This includes the price, quantity, delivery date, and any other important details.
3. Get a witness: Having a third-party witness can help to verify the existence of the agreement and the terms discussed.
4. Seek legal advice: If you are unsure about the enforceability of a verbal contract or the terms of the agreement, it`s always best to seek legal advice.
In conclusion, verbal contracts are legally binding, and they can be just as enforceable as written contracts. However, it`s essential to ensure that all the essential elements of a contract are met, and to take certain steps to ensure enforceability. Remember to document the agreement, include important details, get a witness, and seek legal advice if necessary. With these precautions, you can enter into a verbal contract with confidence.