Although oral contracts are legally binding, Omni Law Group recommends written contracts rather than a verbal agreement. The main reason: Oral contracts are hard to enforce. How do you prove what both parties agreed on without anything in writing?
There are additional problems with oral contracts as well:
- They can be hard to remember. Most people have trouble remembering what they ate for breakfast two weeks ago, so it’s no surprise that details of a verbal agreement can be forgotten or remembered incorrectly.
- Some states impose limitations. An article in Senior Mag did a nice job of explaining, “Some states may however, impose limitations on the verbal contract if the value of it exceeds a certain dollar value or the term of the contract is over a certain period of time. In other words, holding someone to an agreement to provide a service ten years down the road or a multi-million dollar verbal agreement would probably be very tough in most states.”
- There are instances in which they aren’t legally binding. Essortment shares four instances in which verbal contracts aren’t legally binding: 1) The agreement is made regarding something illegal in nature, 2) It is vague and does not tie down specifics, 3) Both parties involved in the oral contract transition had a misunderstanding about the main context of the contract and 4) Transactions that require written contracts like real estate transactions, credit agreements and employment contracts that last longer than one year.
- They can be more expensive. Because you don’t have a record for a judge to refer to, both parties can end up spending much more time in court. Written contracts make the agreement much clearer for a judge, which means less time in court and fewer legal fees.
In general, it’s best to opt for written contracts. It’s much easier to refer to details of an agreement clearly spelled out in black and white, and to enforce them should one of the parties defer from the agreed upon terms.
Do you need help creating a written contract? We can help! Contact us to get started.
Photo Credit: Cushing Memorial Library and Archives, Texas A&M