WHAT IS A VERBAL AGREEMENT?
Verbal agreements are contracts made by individuals through a verbal exchange. These exchanges could be in person, by telephone, or any other form of verbal communication. For a verbal agreement to be legally binding, the following factors need to be covered within it:
· An offer and acceptance: An offer has been made and accepted by the other party.
· Consideration: Something of value has been exchanged for a promise or service.
· Intention: Both parties intend and agree on this legally binding agreement.
· Capacity: Both parties must have the legal capacity to partake in this agreement.
Although under these considerations, a verbal agreement is legally binding, there are some exceptions. Some contracts must be recorded in writing, such as buying a car from a licensed dealer or trader or buying and selling of a house. However, in many other situations, when taking the above factors into consideration, a verbal agreement holds weight in a court of law.
HOW DO I PROTECT MYSELF FROM A BREACH OR LIABILITY?
Although it is not essential for all contracts to be in writing, and many contracts are entered into verbally, there is a clear disadvantage of verbal agreements, and this is the issue of memory. Recollection is integral in the case of a verbal agreement dispute. Therefore, if there were any notes, emails, or text messages in correspondence with the agreement, they could be very useful regarding liability. Third-party witnesses present at the time of the agreement are also integral to a verbal agreement dispute as their witness evidence could be held in high regard.
The common issue with a verbal agreement is that one party could renounce the agreement or deny that the conversation took place at all. Therefore, a written agreement is often preferred over a verbal agreement, as the terms are detailed and noted in a document that has been signed by all the parties involved in that agreement. If there are any disputes, questions, or concerns surrounding the agreement, then the parties can refer to the written agreement.
ARE VERBAL AGREEMENTS LEGALLY BINDING?
There is a common misconception that verbal agreements are not legally binding because they are not physical words printed on paper, but the reality is quite the contrary. When done the right way, verbal agreements are legally binding in the same way as written agreements. There have been instances where a verbal agreement is achieved, and the parties intend on recording the terms of this agreement in a document, but this never occurs. However, even in this instance, the verbal agreement that has been reached is still binding.
WHEN IS A VERBAL AGREEMENT INVALID?
There are some instances that are identified in UK Law that state that an agreement must be in written form. This is to ensure clarity between parties and to also ensure all of the points identified in the agreement are clear for third parties who are not directly involved in the agreement.
Some of these agreements include:
· Selling, transferring, or leasing of land.
· The assignment of the benefit of a pre-existing contract.
In the same light, sometimes a written contract alone is considered insufficient as the law requires it to be executed as an action or deed to be legally binding. Examples of this include the transfer of land, granting power of attorney, the granting of a lease or the appointment of a trustee.
HOW WE CAN HELP YOU WITH YOUR DISPUTE OVER A VERBAL AGREEMENT
If you find yourself at the hands of a verbal agreement dispute, we, as Phillips Lewis Smith in Association with Belluzzo International Partners, offer our clients a dispute resolution service across most sectors of commercial and personal activity, whether our clients wish to pursue or defend a claim. We advise and represent clients in various forms of dispute resolution including proceedings before the English courts and various tribunals and arbitrations. We also negotiate compromises and arrange and advise in alternative dispute resolution processes such as mediation. We also assist in the preparation of proceedings with our correspondents in other jurisdictions.
