The basis of oral agreement
An oral agreement, also known as a verbal agreement, is a contract made verbally between two or more parties. This type of agreement is legally binding, just like a written contract. However, unlike a written contract, an oral agreement is not documented on paper, and it can become difficult to prove its existence when disputes arise.
Oral agreements are common in everyday life. You may make an oral agreement with your landlord about the terms of your lease or with a friend who lends you money. However, there are certain legal requirements that must be met for an oral agreement to be enforceable.
Firstly, an oral agreement must have a clear offer and acceptance. An offer is a proposal made by one party to another, and acceptance is the other party agreeing to the proposal. The offer and acceptance must be clear and unambiguous. If there is no offer or acceptance, there is no agreement.
Secondly, an oral agreement must have consideration. Consideration is something of value that each party gives or promises to give to the other. For example, if you lend your friend money, your consideration is the money, and your friend`s consideration is the promise to pay you back.
Thirdly, an oral agreement must have a lawful purpose. The purpose of the agreement can`t be illegal or against public policy. For example, you can`t make an oral agreement to rob a bank.
Finally, an oral agreement must have the intention to create a legally binding agreement. If the parties don`t intend to be bound by the agreement, there is no legally enforceable oral agreement.
When disputes arise from oral agreements, it can be difficult to prove the existence and terms of the agreement. This is why it is always advisable to have a written contract, which can be used as evidence if a dispute arises. However, if an oral agreement is the only option, it is important to make sure that all legal requirements are met, and the terms of the agreement are clearly understood by all parties.
In conclusion, oral agreements can be legally binding if they meet the legal requirements of offer and acceptance, consideration, lawful purpose, and intention to create a legally binding agreement. However, to avoid misunderstandings and disputes, it is always advisable to have a written contract.