We make verbal agreements without thinking twice. We agree to help a friend move, hire a neighbor’s kid to mow the lawn, or promise to pay someone back next week. But the enforceability of the spoken promise might be in question when money, property, or business is involved. Thankfully, verbal agreements can be legally binding. But proving what was said and agreed upon can be challenging. Read on to know what makes a verbal agreement enforceable.
The Basics of a Legally Binding Contract
A verbal agreement is a type of contract. It can be enforceable if it includes the elements of any valid contract. These elements are:
- A party should propose a deal or service for a verbal agreement to have a legal strength.
- The other party should agree to the terms to make the agreement enforceable.
- The parties should exchange something of value when they make the agreement.
- Intent to be legally bound – Both sides understand they are entering a formal agreement.
When Written Contracts are Necessary
Some types of agreements legally require a written contract. This falls under the Statute of Frauds, which varies by state. Usually, it includes real estate sales, leases longer than one year, and contracts that cannot be performed within one year. Also, prenuptial or marriage-related contracts and sales of goods over a certain value should involve written contracts.
Proving a Verbal Agreement
A major problem with verbal agreements is proving they were made. You may know what was said but you should also convince a judge if without a written record. Here are things that can help establish and support your verbal agreement:
- Anyone who heard the agreement being made can serve as a witness. Courts take testimony into account.
- Text messages or emails. Follow-up messages confirming the terms can strengthen your case even if the agreement was made verbally.
- A contract can exist if one party starts performing their side of the agreement. This can mean delivering a product, starting work, or making payments.
- Written notes or receipts. Jotting down details, keeping invoices or bank statements showing payments can add credibility.
Verbal Agreements in Business Settings
Verbal business agreements can get messy quickly. They are often made during meetings, calls, or quick conversations. Misunderstandings can happen without documentation.
Some business contracts can be made verbally but it is safer to follow up with a written confirmation. A simple email recapping the terms or a short agreement can prevent serious problems later. Always assume written proof will be needed if money or deliverables are involved.
What Happens When Verbal Agreements Go Wrong
Disputes over verbal contracts can quickly turn into complicated legal battles. It often becomes one person’s word against another’s without proof. Courts will look at behavior, supporting evidence, and credibility to decide who to believe.
This can be avoided by putting important agreements in writing. It does not need to be formal to count. A little documentation can go a long way in protecting everyone involved.