Verbal Contract: What It Is and Why It is Not Always Enough

When making a deal or entering into a legal agreement, people often rely on a verbal contract. A verbal contract is an agreement made through spoken words rather than through a written document.

Although a verbal contract is legally enforceable, it is not always the best option. This is because verbal agreements can be difficult to prove, and the terms of the agreement may not be clear or agreed upon by both parties. Therefore, it is always advisable to have a written document that clearly defines the scope of the agreement.

The Importance of a Written Contract

Unlike a verbal contract, a written contract provides a clear record of the agreement made. This record can be used in the event of a dispute or if one party fails to fulfill their obligations. Having a written contract also ensures that both parties are clear on the terms and conditions of the agreement.

In addition, a written contract can provide protection against misunderstandings or misinterpretations. It can also protect both parties from unexpected situations or changes in circumstances. For example, if there is a change in the scope of the agreement, a written contract can be amended to reflect the changes.

The Risks of a Verbal Contract

The main risk associated with a verbal contract is that it is difficult to prove in court. This is because a verbal agreement does not have the same level of formality and documentation as a written contract. In addition, verbal agreements are often made in informal settings, and it can be difficult to accurately recall the terms of the agreement.

Furthermore, verbal agreements can lead to misunderstandings and misinterpretations. This is because the terms of the agreement may not be clearly defined or understood by both parties. In some cases, one party may have a different understanding of the agreement than the other.

Conclusion

While a verbal contract can be legally binding, it is not always the best option. A written contract provides a clear record of the agreement and can protect both parties from misunderstandings and changes in circumstances. It is always advisable to have a written agreement, even if the initial agreement is reached verbally.