Is A Verbal Agreement Legally Binding?
Verbal agreements are common in a huge range of business situations, although parties on both sides often make false assumptions about whether they are enforceable as contracts under the laws of England and Wales. Before you enter into this kind of agreement, it is vital that you understand the answer to the question ‘is a verbal agreement legally binding?’.
In short, the answer to this question is typically yes. There is a common misconception that an agreement has to be in writing to be legally binding, but this is not always the case.
Provided that the agreement conforms to the legal requirements of what a contract should contain, then there is no reason why an agreement made verbally between two or more persons cannot be binding.
The legal requirements as to what does and does not create a contract in English law would fill several volumes and detailing them all is far beyond the scope of this note. Suffice it to say that the “ingredients” of a simple contract typically include:
- An offer which is accepted between parties
- A form of exchange between them (what lawyers call “consideration”)
- An intention to be bound by its terms.
The parties must also have the capacity to enter into the agreement. There is no requirement that the terms should be in writing to be binding.
You should note that, although it is generally speaking the case that verbal agreements can be legally binding, legislation makes it a requirement for certain contracts to be in writing. Perhaps the most common example is contracts for the sale and purchase of land. If these contracts are not made in writing and in line with the legislation, then there is a high risk the agreement will not be enforceable.
I made a verbal agreement with a person a while ago and I believe it has been breached. Can I take them to court?
There is no reason why a court would not enforce the terms of a verbal agreement, any more or less than it would an agreement that has been set out in writing. If it is deemed to contain the requirements of a binding and enforceable contract and is brought within the correct limitation period, then a court could enforce it.
The problem is not whether the verbal agreement could be enforced, but in proving what the terms of the agreement are. If the agreement is not written down anywhere and the other party is disputing what was agreed, then seeking enforcement of its terms could be very difficult indeed.
The fact that you would be considering taking it to court means there must be some type of dispute over its terms and the other party could challenge what was said at the time of contracting with relative ease. This puts a substantial evidential burden on you to prove your case, especially when compared to a dispute over an agreement where the terms are all written down.
Is it possible for an agreement to contain both verbal and written terms?
Provided that it conforms to the requirements of what a legally binding contract should contain, as mentioned above, then it is possible for an agreement to have elements of both verbal and written terms.
That said, written agreements often contain clauses (such as an “entire agreement” clause) which do not permit terms outside the written contract to be considered as part of the agreement. In that case, verbally agreed terms and representations made aside from the written contract would not likely be deemed binding and enforceable.
Caution should therefore be exercised with these types of contract and it is highly recommended that the entire agreement is set down in writing, for clarity and to save any confusion as to what terms are and are not a binding and enforceable part of the contract.
What about contracts that have been varied verbally? Are these variations binding and enforceable?
It depends. Written contracts often contain stipulations on variations. For example, it could say that all variations must be agreed in writing, or in writing and signed by all parties, or a particular notice requirement must be fulfilled for it to take effect.
If an agreement is set down in writing and the parties want to vary it, they must therefore be very careful that this variation is done in line with what the written agreement says, or they could run a high risk that the variation will not be enforceable.
Verbal variations should regardless be avoided in favour of the certainty of having every variation to an agreement clearly and comprehensively set down in writing.
Is it recommended to put a contract in writing, even though a verbal agreement can be enforced in court anyway?
Absolutely, yes. A written agreement provides parties with a degree of certainty and comfort far beyond what a verbal agreement would do. Although written agreements can be the subject of litigation too, if they are drafted correctly and the terms are clear, then they are much more evidentially robust than verbal agreements, due to the fact that their terms can be picked up and reviewed by any objective observer, including a Judge.
If you are unsure whether your verbal agreement is legally binding or wish to have a robust written agreement drafted, you should speak to a qualified solicitor. The business disputes team at GA Solicitors in Plymouth has decades of experience advising on the legality of verbal agreements, delivering the highest level of client service at all times.
For a clear and transparent discussion about whether your verbal agreement is legally binding, you call the team on 01752 203500 or email me directly at ieuan.jones@GAsolicitors.com.
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