Can Verbal Contracts Be Enforceable?


Verbal Contracts: Do you know about it? Yes or No?

Can verbal contracts be enforceable? The short answer is yes, they can. The question therefore really is, have you entered into an oral contract and thus, what is an oral contract? So, from the outset, a contract does not have to be in writing. It can take the form of a verbal agreement. Although not as common as written agreements, they most certainly can be enforced as if they are written. So, to have an enforceable oral contract (or agreement), the basic elements have to be satisfied. They are as follows:

  1. Offer: is also as simple as a readiness to contract on specific terms. Eg. “I can landscape your garden for $5,000. We’ll put in some rocks over there, new plants there and perhaps level the pavers off there”.
  2. Acceptance: must be unconditional acceptance of the offer. Eg. “I accept that offer in those specific terms”. Unconditional means, not conditional. Which means, “I need it in writing first or I want a written quote that is itemised”.
  3. Consideration: there must be some form of price or something that compels a party to enter into the agreement. Example, $5000 in this instance
    or “you do my landscaping and I will do your tiling in your bathroom”. The important point is that it does not have to be money.
  4. Intentions to create legal relations: that is, there must be a clear intention of the parties to enter into and create legal relations. Eg. If I said it as a joke and didn’t mean it—“I will accept your offer and give you my house”– arguably the inequality of that bargain would suggest the recipient didn’t intend to enter into the agreement to create legal relations.
  5. Capacity to contract: a person without capacity cannot fully appreciate the extent and nature of their actions and are consequently in no position to enter into a contractual relationship.

So the short answer is to be careful when considering entering into an agreement. The downside to an oral agreement is the lack of specificity in the terms of the agreement. Eg. “I didn’t know there was to be only 3 boulders, I thought it was 8”. Conversely, your written contract may not have all the required terms as mentioned above, so it is important not to assume that a contract exists only upon execution of a document. As always, it is not clear cut, so discuss with your lawyer.

This column is not legal advice as it does not take into consideration your individual facts and you ought seek independent legal advice.