Oral Agreement Validity

Oral Agreement Validity: Understanding the Law

As a business owner or individual entering into an agreement with another party, it`s crucial to understand the law regarding oral agreements. While it may seem like a verbal agreement is just as valid as a written one, the legal system does not always view it that way. Here`s what you need to know about oral agreement validity.

What Is an Oral Agreement?

An oral agreement, also known as a verbal agreement, is a contract made between two or more parties without any written documentation. These agreements are made verbally, usually through a conversation or phone call. For example, if you agree to sell your house to someone at a specific price over the phone, that conversation could be considered an oral agreement.

Is an Oral Agreement Legally Binding?

The answer to this question is not a straightforward yes or no. It depends on the specific circumstances of the agreement. While oral agreements are legally binding in some cases, they are not enforceable in others.

In general, oral agreements can be legally binding if they meet certain criteria. First, there must be a clear offer from one party and acceptance by the other. Second, there must be some form of consideration, which means that both parties must receive something of value in exchange for their agreement. Lastly, the terms of the agreement must be definite and specific.

However, there are some situations in which oral agreements are not legally binding. For example, certain types of contracts, such as those for the sale of real estate, must be in writing to be enforceable. Additionally, some states have laws that require certain types of agreements, such as employment contracts, to be in writing.

The Importance of Written Contracts

Given the potential issues with oral agreements, it`s always a good idea to have a written contract whenever possible. A written contract provides a clear record of the agreement`s terms and can help avoid misunderstandings or disputes down the road. It`s also much easier to enforce a written contract in court than an oral one.

If you do enter into an oral agreement, it`s essential to document the terms of the agreement as thoroughly as possible. This may include sending an email or letter summarizing the agreement and asking the other party to confirm or sign off on the terms.


In summary, oral agreements can be legally binding in certain circumstances, but they aren`t always enforceable. It`s crucial to understand the law regarding oral agreements before entering into one. Whenever possible, it`s best to have a written contract to avoid potential issues and provide a clear record of the agreement`s terms. If you do enter into an oral agreement, be sure to document the terms as thoroughly as possible.


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