1. Is a Verbal Agreement Legally Binding?
2. Elements of a Contract

Updated November 3, 2020:

Many people often wonder, “Do verbal agreements hold up in court?” This is a difficult question to navigate, as it often depends on the situation. Theoretically, yes, verbal agreements will hold up in court in many situations—but not all. They can be difficult to prove if one party decides to be dishonest in the event of legal proceedings.

Is a Verbal Agreement Legally Binding?

A verbal agreement and an oral contract are, in general, legally binding agreements if they are equitable, conscionable, reasonable, and performed in good faith. While most will associate any legal agreement with a document on paper that has been signed and stamped by a notary, there are only a few contract types that must be written to be enforceable.

Many people are wary of verbal agreements and oral contracts because they can often be hard to enforce. A written contract is a tool and is more easily executed than any verbal agreement. It is also useful in court to the contractual parties testifying.

It can also be hard to determine defects in the contract if it is not in writing. If an oral contract goes to court, the risk of one side lying about the agreement is a concern. All parties to the contract could be lying about the terms, creating a major issue for the court, likely resulting in the case being thrown out.

There are some forms of contracts that are silent and do not need any words to be written or spoken. An implied contract is carried out without words often. When you go to the store to buy a gallon of milk, you are accepting a good in exchange for money. The transaction at the register is implicit once you bring your milk to the cashier.

Oral contracts can be enforced, although many people believe differently. They are not often in the best interest of either party and can end up in a battle of he said, she said. If there is enough evidence, however, the court will enforce such an agreement. The Statute of Frauds, however, is one major exception.

The Statute, which has been adopted in almost all U.S. states, will require a contract in written form in:

·      Sales of real estate

·      Leases of real estate that are longer than a year

·      Property transfer after the death of the owner

·      Agreements to pay debt for someone else

·      Any contract that takes more than a year to complete

·      A contract that will last beyond the life of at least one party

·      A contract that involves and exceeds a specified amount of money, which varies by state

Courts will not typically enforce an oral contract in any of these instances. There will have to be a written document signed by all parties to be enforceable.

There are some exceptions to the Statute of Frauds. An oral contract that is in the terms of the Statute will still be enforced as long as:

·      One party has partially complied with the terms

·      The plaintiff has relied on the promise of the defendant and encountered a form of detriment

The plaintiff will have the burden of providing any evidence of these situations.

Contract law is not favorable of oral contracts. They can be difficult to prove. They can also be used for fraud. It is best to get any agreements in writing.

Elements of a Contract

There has to be an offer and acceptance of that offer in a contract. One party has to propose a deal and the other party has to accept it.

Consideration is an important element. It means that both parties will have to provide something in exchange for a contract. There also needs to be mutual assent. This simply means there has to be a hashing out or meeting of the minds.  All parties have to understand how the contract is going to work.

To ensure that the contract will hold up in court, there can be no valid defense to the enforcement. An example would be a party being sued by a minor. The contract also cannot be enforced if one party claims the contract was fraudulent or a result of duress.

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