When you think of a legally binding agreement, you might envision a written contract filled with numbered provisions. But a verbal agreement can be just as valid as a written one in certain circumstances. While it is wise to write down agreements, a verbal agreement between two parties can be enforceable provided it contains the proper elements and relates to the right type of transaction.
Elements of a Contract
For a verbal agreement to be enforceable in court, it must meet the basic elements of a contract. And for a contract to be valid, the parties who enter the contract must be mentally competent. A contract requires consideration, which is something of value that one party gives to another. Consideration could be money, land, or the promise to do work. Finally, for a contract to be valid two people must agree to the same terms. There must be an offer from one party and an acceptance by the other. Both parties must intend to enter into the contract, and their intent must be expressed in clear language. "I will change your oil for $50" is clear enough to constitute an offer. Acceptance must be a clear statement such as "We have an agreement," or "I accept your offer."
Some offers must be accepted immediately, while others give you a certain number of days to accept. If the person who makes the offer gives you five days to accept, you must accept within five days or the offer has expired.
Types of Agreements That Require a Written Contract
Certain types of agreements require a written contract. These include agreements relating to the sale of goods such as an automobile valued at more than $500; contracts for the purchase of land; agreement that take more than one year to accomplish, such as a delivery agreement for the next two years; and copyright transfer contracts. Also, be wary of promises made to pay you by someone who may not have the authority to contract with you.
Enforcing a Verbal Agreement
A verbal agreement can be enforced in court when the party who is suing establishes that a contract was formed. You may need the testimony of witnesses who were present when the agreement was reached or when money changed hands, or witnesses who saw the work being done that was the substance of the agreement.
While a judge could decide that you and the other person had a contract, determining the amount at stake can be tricky. You may remember charging $500, while the other person remembers the cost being $400. The judge may decide that the other person's testimony is more trustworthy and you will receive only $400.
An agreement to do something illegal, such as to steal merchandise, cannot be enforced. Also, most states require that a person be at least 18 years old to enter into most contracts.