In the world of business, agreements made between parties are most often put into writing. However, there are instances when parties agree verbally, and some may wonder whether an oral or verbal agreement is legally binding.
An oral or verbal agreement is a contract entered into by parties verbally. It does not involve any written documentation or formalities such as signatures, stamps, or seals. This type of agreement is often made between individuals or entities that are in a personal or informal relationship, such as friends, family members, or small business owners.
While oral or verbal agreements are generally legally binding, they can be harder to prove in court compared to written agreements. This is because there is no written record of the terms of the agreement. Proving an oral agreement can be challenging as the parties may have different versions of what was agreed upon, leading to a dispute.
To ensure that the oral agreement is legally binding, there are some best practices that parties can follow. First, it is important to have a clear understanding of the terms of the agreement. Both parties should be specific about what they are agreeing on to avoid misunderstandings.
Second, parties should keep track of any documents or correspondence that support the agreement. Emails, texts, and voicemails can serve as evidence of the agreement.
Third, it is advisable to have a witness present when the agreement is made. The witness can attest to the fact that an agreement was made and the terms that were agreed upon.
Lastly, parties should consider creating a written summary of the agreement that both parties can sign. This written summary can serve as evidence in court if a dispute arises.
In conclusion, an oral or verbal agreement can be legally binding if it meets certain criteria. Parties should be clear about the terms of the agreement, keep track of supporting documentation, have a witness present, and consider creating a written summary of the agreement. By following these best practices, parties can reduce the risk of disputes and ensure that their oral agreements are legally binding.