Home Business & Economy Enforceable: Oral vrs Written Contract

Enforceable: Oral vrs Written Contract


Before you go into an agreement with another party, ensure that aside the offer, acceptance and consideration, there is a clear intention by the parties to make a legally binding agreement; and they must have the legal capacity to enter into the contract.

Oral or sometimes verbal contract, is an agreement by spoken communication between two or more parties. On the other hand, a written contract is an agreement that is recorded in writing and signed by the parties to authorise the terms of engagement.

With these basic definitions established, it is important to understand that, there can be serious consequences for breaching a contract, whether verbal or written. Research has shown that breach of contract equals about 30% of all legal actions filed against small businesses.

Oral Contracts are enforceable! Yes they are! But it is extremely hard to prove their existence because the terms of agreement is mainly dependent on the memory of the parties. In the instance where a breach of an oral contract arises, evidence such as screen shots of text messages, emails, voicemail messages, written notes, and a recorded conversation done with the permission of the other party, can be used as evidence, subject to the judge’s determination of whether it is sufficient enough.

Imagine a client refuses to pay the total of a verbally agreed amount for a service after delivery, with no written invoice or document prior to delivering the service. Your chances of getting justice is tiny, since it will be very difficult to prove the client actually agreed to pay that amount before you delivered the service.

Written contracts solve problems! And even though many small businesses believe their clients may react negatively to it, written agreements are essential for a good working relationship with providers, vendors, partners and clients or customers. They remove doubt and create certainty, outline obligations and remedies, provide procedures for disputes, and help you end relationships fairly.

In other words, A written agreement spells out exactly what both sides are bargaining for, and what each side promises to do, thereby alleviating to a significant extent the confusion and uncertainty inherent in oral contracts. When an agreement is written, it must list and explain the facts in detail, made valid by all parties appending their signatures to the terms stated.

Once the agreement is signed, neither party can reject or claim them to be false. In the event where you enter a verbal agreement, you must try as much as possible to keep notes of conversations about what was agreed and then quickly follow up with an email or letter to the other party confirming the agreed terms.

You must always make it clear what you do, and do not intend to be bound by because there can be serious consequences for breaching a contract, whether verbal or written. It is best to always seek legal advice before you enter into an agreement, especially if you are unsure about any terms and do not fully understand your rights or obligations.


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