As a civil litigator, I frequently encounter individuals whosue over “oral contracts.” Today I’d like to explore this topic.
Are oral contracts binding?
In the absence of statutory requirements (for example, domestic contracts), a contract is valid as long as it meets the common law requisites, such as offer, acceptance, consideration, capacity, and intention. Therefore, an oral agreement that meets the common law criteria is enforceable.
On the other hand, if any of these elements are missing, the transaction in question -regardless of whether it’s in writing or not – will not be considered as a contract and is not legally binding.
If you have an oral contract that is otherwise valid, how do you prove and enforce it?
In most commercial transactions, you may prove the contract in one of the following ways:
- Standard commercial practices: If the parties have dealt with each other before, you may be able to infer the terms from the prior transactions.
- Prior correspondences: Many commercial ventures involve prior correspondence and negotiation. If you have letters or emails concerning the transaction in question, you may be able to demonstrate the intention of the parties when the contract was entered into.
- Commercial reasonableness: In many industries, there are established practices that most transactions follow. For example, if you go to a restaurant, it’s generally assumed that you’ll pay for the bill, even if you didn’t explicitly agree to it before ordering your meal.
Although there are ways to prove an oral contract, I recommend that you have your contracts in writing to avoid the hassle of proving an oral contract, should the deal go sour.
