Though there are several limitations (for example, settlement agreements between employers and workers or land purchase and sale agreements), verbal agreements can be legally binding as oral contracts.
Verbal agreements are reached through substantive deliberation among the involved parties, irrespective of the mode of communication (e.g., email, telephone, or in person). For instance, an agreement reached in a social setting while the parties are intoxicated would not be easily construed as a legally binding verbal agreement. In order for a verbal agreement to possess legal force, specific conditions must be fulfilled.
These conditions include:
- Offer and Acceptance: One party presents an offer that another party agrees to.
- Consideration: There must be a valuable exchange for a promise, not limited to monetary value.
- Intention: Both parties must intend to create a legally binding agreement.
- Capacity: Each party involved must possess the legal capability to enter into the contract.
Enforcing a verbal agreement
One frequent source of contention is when one party breaches a verbal agreement and refutes the existence of a consensus.
While verbal agreements, also known as oral contracts, possess the same legal force as written ones, substantiating them can be considerably challenging due to the absence of formal documentation associated with them. It is recommended to document verbal agreements in writing, such as by confirming them via email, so that they can be referred to as evidence in the event of a future dispute.
Therefore, while it possesses the same legal standing as a physical agreement, enforcement is improbable unless a judge is convinced that the evidence presented constitutes a complete and absolute agreement on the terms of the agreement. A complete and final agreement exists when every party involved has reached a consensus on all the terms and conditions pertaining to the service.
To provide substantiation that a verbal agreement is legally enforceable. Any correspondence or documentation supporting the existence of a verbal agreement, including witness statements, notes taken during the agreement, proof of payment, or subsequent SMS or email transcripts, may be introduced in court as evidence.
The judge will apply sound judgement when evaluating the evidence and the pertinent circumstances of the case. In a court of law, agreements in principle will not be regarded as fully formed and will not be enforceable. In conclusion, while a verbal agreement may constitute a legally enforceable contract, it must fulfil the aforementioned four requirements. It results from a comprehensive discussion between the parties, during which they reach an agreement on the terms.
Although a verbal agreement is legally binding, just like a written agreement, substantiating the agreement can be challenging. The court requires the presentation of satisfactory evidence, as described above, in order to establish such an agreement. The judge will employ a rational approach.
