When it comes to legal contracts, there are two types: written and oral. While written contracts are the most common and widely accepted form, oral contracts are also legally binding. These agreements are made through spoken communication and can be just as enforceable as written contracts, granted that they meet certain requirements.
Oral contracts, also known as “verbal contracts,” are agreements made between two or more parties without any written documentation. The terms and conditions of the contract are discussed orally and must be agreed upon by all parties involved. For example, if you agree to sell your car to a friend for a certain amount of money, and your friend agrees to pay you that amount, you have entered into an oral contract.
However, there are some limitations to oral contracts. For a contract to be legally binding, there must be evidence that the agreement was made. This can be proven through witness testimony or other forms of evidence that demonstrate the parties involved agreed to the terms. Additionally, certain types of contracts must be in writing to be enforceable, such as real estate contracts, contracts lasting longer than one year, and contracts for the sale of goods over a certain value.
The common law principle of “statute of frauds” requires certain types of contracts to be in writing to be enforceable. These include contracts for the sale of goods over a certain value, real estate contracts, and contracts lasting longer than one year. However, some states have modified their statute of frauds to permit oral contracts under certain conditions.
It is also important to note that oral contracts can be tricky to enforce as compared to written ones because there is no written record of the agreement. In case of any disputes, it will be challenging to ascertain what was exactly agreed upon. In such cases, it is better to have a written contract so that both parties can refer back to it for clarification.
In conclusion, oral contracts are legally binding, but they require evidence to prove that an agreement was made. Oral contracts can be enforceable; however, it is always advisable to put them into writing to avoid any misunderstandings or disputes in the future. Therefore, when entering into any contract, it is always best to consult with a legal professional to ensure that your rights and obligations are adequately protected.