Oral Contracts are Generally as Enforceable as Written Contracts
Contracts are an integral part of conducting business as they provide a clear agreement between two parties. Typically, contracts are written and signed by both parties, but in some cases, an oral contract can be just as legally binding.
An oral contract, also known as a verbal contract, is a spoken agreement between two or more parties. These types of contracts are generally considered valid and enforceable as long as they meet certain requirements.
Firstly, the terms of the agreement must be clear and unambiguous. Both parties must be clear about what they have agreed to and cannot later claim that there was a misunderstanding. Additionally, both parties must have agreed to the terms, usually by saying “yes” or making some other indication of agreement.
Secondly, the agreement must be supported by some form of consideration. In other words, each party must receive some benefit from the contract, such as goods or services. Consideration can also take the form of a promise to do something or refrain from doing something.
Thirdly, an oral contract must be legally permissible. Some contracts, such as those related to the sale of real estate, must be in writing to be legally binding. And contracts that are illegal or violate public policy are not enforceable, whether they are written or oral.
Despite these requirements, oral contracts can be just as legally binding as their written counterparts. And in some cases, they may even be preferable. For example, oral contracts can be more efficient, especially for small transactions or where the parties have an established relationship built on trust.
When it comes to enforcing an oral contract, evidence is key. Unlike written contracts, there is no tangible document to refer to when there is a dispute. As a result, parties may need to rely on witness testimony or other forms of evidence to prove the terms of the agreement.
It`s worth noting that in some states, certain types of contracts are required to be in writing to be enforceable. These typically include contracts related to real estate, contracts that cannot be performed within one year, and contracts for the sale of goods over a certain amount.
In conclusion, oral contracts can be just as legally binding as written contracts, as long as they meet certain requirements. They are a useful tool for small transactions or where the parties have an established relationship built on trust. However, it`s important to remember that evidence is key when it comes to enforcing an oral contract. If in doubt, it`s always best to consult with a lawyer.