Are verbal agreements legally enforceable?

Are verbal agreements legally enforceable?

It is a common misconception that verbal agreements hold no legal weight and therefore cannot be enforced but, this is not necessarily the case.

The ideal situation is that there is a written agreement as this helps to manage the expectations of parties involved and provides a reference point in the event of a dispute.

However, it is common that parties make verbal agreements, by telephone or in person. In such instances it is possible that it can be enforced in a Court of law.

Key Elements

The enforceability of a verbal agreement hinges on the presence of the following key elements.

• An offer: One party must present something that is clear, definite, and capable of acceptance or rejection by another party.
• An acceptance: The other party must agree or consent to receive or undertake what is being offered.
• Consideration: Both parties must exchange something of value (e.g., goods, services, money) as part of the agreement.
• Intention to create legal relations: Both parties must have the intention that the agreement would be binding and subject to the law of contract. If a matter is taken to Court, the Court will try to mirror the intention of the parties.

Some other important elements to consider are:

• Capacity: it is important to ensure that all parties have capacity to enter a contract. For example, it is generally assumed that a person lacks capacity if they are under aged or suffering from a mental illness.
• Legality: If a contract stipulates that a party must partake in illegal activity, the contract will be deemed void.

Evidence

While written contracts provide a documented record of these elements, verbal agreements can also fulfil the criteria and therefore be considered legally binding.

Acceptance of an offer may be evidenced through words, actions, or conduct. The mere presence of acceptance suggests there was an offer to begin with.

Consideration can be evidenced by goods or services being exchanged or even refraining from certain actions or promising certain actions.

Intention to create legal relations can often be inferred from the circumstances and the nature of the agreement. The Court will consider factors such as whether the parties are individuals or companies, the relationship between the parties, whether a third party is involved and various other factors.

Your recollection of the terms is pivotal alongside evidence such as emails, text messages, or witness testimonies, in proving the existence and terms of an agreement.

Although enforceable, it can be challenging to prove the terms and existence of a verbal agreement, but not impossible.

If you are party to a verbal agreement where the terms have been breached, we can help you assess the circumstances, advise on whether the agreement is likely to be enforceable and represent you if all the elements mentioned above are present.

Please contact me by email to Mary.Yusuf@patronlaw.co.uk if you wish to discuss.

This article is for general information only and does not constitute legal or professional advice.