Is a verbal agreement legally binding?

An agreement does not have to be in written form to be legally binding.

However, it will become legally binding, if it encompasses the following characteristics:

  • An offer must be made, and there must be acceptance of an offer.
  • All of the terms of the agreement must be decided upon, to ensure completeness of the agreement.
  • Both parties need to intend to become legally bound.
  • Consideration (something of value e.g. money, goods or services) has been exchanged.
  • Parties must have the Legal Capacity e.g. over 18, have no invalidating mental impairment, nor be under the influence of drugs or alcohol.

The problems with verbal agreements:

Problems can arise if a party defaults, stops performance, or if there is a dispute.

The downfall is that the original agreements are extremely difficult to prove. It is recommended that you put any agreements in writing and provide as much detail as possible.

If it is not possible to reduce your agreement to writing, then implement the following steps:

  • take detailed notes about the transaction,
  • keep all written communication between the parties,
  • make sure both parties are clear about the contract terms.

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Source: MacLeod, Nadia. ‘Verbal Agreement Legally Binding’. N.p., 2015. Web. 10 Feb. 2015