Do verbal contracts mean anything is an important question. While a written contract is easier to enforce legally, verbal and oral contracts are legal. When two or more parties agree to the terms of a contract, they have entered into a contract.

If the terms of the contract are not met, legal action may be taken. For example, if a painter verbally agrees with a homeowner to paint the outside of a house for $2,000, the painter must complete the task to receive payment. On the flip side, the homeowner has agreed to pay the stated amount. If the painter doesn't complete the work or if the homeowner doesn't pay, the parties can go to court to have the contract enforced.

Rights and Responsibilities of a Verbal Contract

Although verbal contracts are legal, when possible a written contract with all pertinent details should be drafted and signed by the parties involved. This will prevent issues if legal action is required. If you go with a verbal contract only, the following details should be adhered to:

  • A verbal contract, just like a written contract, must include the following three components:
    • An offer.
    • The acceptance of the offer.
    • A consideration, which is typically the payment for the completed task.
  • Check with the state to confirm that your contract can be verbal. Many states have a statute of frauds which lists which contracts must be written to be enforced legally. These are usually contracts related to land sales, goods over a specific dollar amount, and contracts that will take longer than one year to complete.

Legality in Court

Legally speaking, oral contracts can be quite difficult to enforce. Without a written record of what was agreed upon, additional evidence must be present for a court to enforce the contract terms. In court, these cases become a "he said, she said" scenario, which makes them difficult for the court to uphold.

In most states, a statute of frauds is in place to require that certain contracts be written. Situations where contracts must be written include real estate or land sales where a deed, written contract, or similar documentation must exist. If written documentation is not used, either party involved can void the contract.

If the contract that was formed involves any illegal activity, the oral contract or agreement cannot be upheld in a court of law. The court cannot uphold any contract that violates state and/or federal laws.

A verbal contract is a binding agreement as long as the following have occurred:

  • The terms of the agreement are spoken and agreed to.
  • The parties agree to complete a service for a specific amount.
  • Witnesses are recommended for verbal contracts as a way to prove what was agreed to at a later date. Witnesses for both sides should be present. However these are not strictly necessary for the verbal contract to exist.

To be able to provide evidence of what was agreed upon, it is recommended that you take in-depth notes during the verbal contract negotiation. A record of meetings and phone calls should be kept along with any shared files or documentation that was used before, during, or after the negotiation and agreement took place.

After the verbal contract is agreed to, an email should be sent detailing the details of the verbal contract. This can be as simple as stating that you are confirming the details and including a request that they reply back saying that they understand all of the terms. This type of exchange will show documented evidence of the terms of the verbal contract.

When a Contract Must Be in Writing

There are common situations where a contract is legally required to be in writing. Some examples include:

  • Marital contracts such as a prenuptial agreement.
  • Sale of real estate or land.
  • Contracts that will take longer than one year to complete.
  • Contracts used to fulfill an obligation to a creditor for someone else, like an executor of a will.

In these cases, the written contract should also include an offer, acceptance, and consideration. The competency of the parties must be valid, meaning they are over the age of 18 and are of full mental capacity.

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