Verbal contract laws

Written by elle hanson
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Verbal contract laws
Verbal contracts can be very difficult to enforce or prove in a court of law because there is no written evidence. (Getty Thinkstock)

Verbal contracts are legally enforceable agreements made between two or more parties. Among other things, they frequently relate to the exchange of goods or services. However, there are very specific laws governing what makes a verbal contract legally enforceable. Moreover, if one of the parties breaks the contract the only way to compel them to complete the specified obligations is by taking them to court and prove a breach of contract.

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Mutual consent

For a verbal contract to be legally binding, both parties must understand the terms of the agreement. For example, if one party thinks that they will be purchasing a particular good for £325 but the other person involved in the contract believes the amount to be £195, the contract is considered null and void. If taken to court, it may be difficult to prove that mutual consent actually occurred.

Mutual consideration

If the verbal contract involves the exchange of goods or services, both parties must agree that they are engaging in a fair trade. This means that neither party can later nullify the contract on the basis that the goods they are providing are worth more than what they are receiving in return. If mutual consideration is not established, either party is free to exit the transaction should they find a more beneficial one.

Illegal activities

If a verbal contract involves illegal activity it is automatically null, void and cannot be enforced.

Specified terms of agreement

A verbal contract must specify clearly defined actions or amounts of exchange. For example, if one party tells another that they are going to purchase something from them, this does not constitute a verbal contract. The exact amount, purchase date, and expected course of action from both parties must be specified to make it legally binding.

Good faith

A verbal contract must be made in good faith to be enforceable. If an individual knowingly enters an agreement with the intention of breaching it, the other party will not be required to uphold their end of the contract.

Offer and acceptance

For a oral contract to be legally enforceable, one party must make the offer and the other must accept. If the latter responds with a counter-offer, this does not constitute acceptance of the agreement. Both parties should clearly state that they agree to the terms of the contract after the bargaining process is completed.

Proving a legal agreement

If a verbal contract is taken to court due to a breach by either party, it can be difficult to prove that any sort of agreement was made in the first place. The most typical legal route is to present a preponderance of evidence. This might include witnesses and corroborating evidence, such as proof of payments or documented actions.

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