Oral Agreement Legally Binding

Oral Agreement Legally Binding: Understanding the Validity and Enforceability of Verbal Contracts

When it comes to business dealings, contracts are often assumed to be in writing. The idea of a verbal agreement seems outdated and unreliable. However, an oral agreement can be legally binding and enforceable under certain circumstances. Let`s take a closer look at what makes an oral agreement legally binding.

What is an Oral Agreement?

An oral agreement, also known as a verbal agreement or handshake deal, is a contract made between two parties verbally and without written documentation. It is a form of contract that relies on spoken words to establish the terms and conditions of an agreement. While oral agreements are not commonly used in business transactions, they are still widely used in many other settings, such as in personal relationships or between friends.

Is an Oral Agreement Legally Binding?

The short answer is yes, an oral agreement can be legally binding. However, in order for it to be legally enforceable, certain conditions must be met. The first and most important condition is that the agreement must be based on a mutual understanding of the terms and conditions by both parties.

To establish the validity of an oral agreement, courts will look for evidence that the parties involved intended to be bound by the agreement, such as the conduct of the parties or any correspondence exchanged after the agreement was made. While it may be hard to prove what was said or agreed upon, a court will review the evidence provided and decide whether the oral agreement is legally binding or not.

When is an Oral Agreement Enforceable?

An oral agreement is enforceable if it meets certain legal requirements. The specific requirements depend on the jurisdiction, but in general, the following conditions must be met:

1. The agreement must be for a valid purpose or consideration.

2. There must be a clear offer and acceptance of the terms and conditions.

3. Both parties must be competent and have the legal capacity to enter into a contract.

4. The terms of the agreement must be specific and not open to interpretation.

5. The agreement must be supported by “consideration,” meaning something of value must be exchanged between the parties, such as goods or services.

It’s essential to note that some contracts cannot be made orally, such as real estate contracts or contracts that require a written record under the Statute of Frauds. In these cases, the agreement must be in writing to be enforceable.

How to Protect Yourself

Even though an oral agreement can be legally binding, it`s always best to put it in writing. A written contract serves as a clear record of the agreed-upon terms and conditions between the parties. If you need to make an oral agreement, it`s essential to follow up with a written confirmation of the agreement via email or letter. This serves as evidence of the agreement and can help prove the intent of the parties.


In conclusion, an oral agreement can be legally binding provided that the intent and conditions of the agreement are clear and mutually understood. While it`s always advised to have a written agreement, it`s good to know that an oral agreement can also be legally enforceable. As always, it`s best to consult a legal expert to ensure that you are following the correct procedures and requirements when making an oral agreement.

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