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Promises, Promises: When Is A Verbal Contract Good Enough?

Updated: Apr 1, 2021

Your word is your bond. Or, so the saying goes.

Are verbal contracts legal? I get asked this question a lot. And, the simple answer is: Yes, they are, in fact, enforceable. So, if oral agreements are legal, enforceable and binding, it begs the question: what's the point of written contracts if a promise is a promise?. Well, not so fast.

Even though verbal contracts are legal, their validity can be very difficult to prove if certain elements are not satisfied. In general, to be valid and enforceable, a verbal contract (as well as written ones) must include an offer, with definite terms, an acceptance, and both parties must exchange some kind of consideration to seal the deal. Consideration can be either something of value or merely a promise to show that you intend to enter into an agreement. Seems easy enough, right?

The difficulty of verbal contracts, however, is that if things go sour between the parties, it can be very hard to prove that the contract ever truly existed. In any case, to enforce your rights under an agreement, you may have sue the other party before you'd see the benefit of the bargain that you made. But, how can you demonstrate that a contract was made and that the other party made certain specific promises to you if you have nothing in writing to show that the agreement actually happened?

As the saying goes, actions speak louder than words.

Without a writing, you might be able to point to the other party's actions to show that they did intend to contract with you, despite their claims to the contrary. After all, if the other party never intended to be under contract with you, then how might their actions be otherwise explained?

For example, let's say your neighbor offers to sell you his brand new never before used BBQ grill set. He lets you enter his backyard to move it from his property to yours, which you do. The next day he claims there was never a contract but his actions of unlocking his gate and watching you take it away can be used to show that he did in fact agree to sell you his BBQ set.

"Unless commitment is made, there are only promises and hopes; but no plans."
Peter F. Drucker, influential management thinker, educator and author

The facts in this example may work for some, but the bottom line is, the better thing to do is to always get it in writing! Anything you can do to reduce your verbal agreement into a written document that describes the terms of your contract will go a long way towards making sure that your legal interests are protected. It's amazing how time and circumstances can change how people feel about agreements that they made long ago. Ideally, for business transactions that are more complex and can have serious legal consequences, you'll want to work with an attorney to help you outline the terms, rights and obligations under your agreement and have your contract signed by the other party or parties in order to protect your and their legal rights.

In many day-to-day circumstances, we often feel that a verbal contract is perfectly sufficient. When all you have is a verbal agreement, it's never a bad idea to back up these spoken promises with any communications or evidence of actions that show that you both meant business. Things like e-mails, text messages, phone calls, audio recordings, camera phone videos, social media posts, and why not, witnesses, can help to show that your verbal contract is valid.

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