People commonly wonder, "Are verbal contracts binding?" Verbal contracts and agreements are typically legally binding if they are reasonable, fair, and made in good faith. Even though most people associate contracts with written documents that must be signed, very few contracts are actually required to be written to be valid.
One of the main reasons verbal contracts are approached with caution is they are much harder to enforce than written contracts. A written document can clearly be presented as evidence in court. However, if a verbal contract is brought to court, there is always a chance that one party is lying. If both parties lie about a contract, it creates a legal impasse for the court.
As long as a verbal contract is rational and conscionable, it is valid. An example of this is if you borrow a car from a friend. There is an expectation that you will return the car in good working order. Your friend doesn't make you sign a document saying you will return the car without a scratch, but the agreement is understood with words and the action of your friend giving you the keys.
Although most verbal contracts are legally binding, there are occasions where that is not the case. If a contract isn't constructed properly or doesn't have a legal purpose, it will not be binding.
Taking it a step further, some contracts don't even have to be written or spoken to be valid. Implied contracts happen every day. When you go into a store and make a purchase, you are receiving goods in exchange for money. The agreement is implied as soon as you take your items to purchase to the cash register.
Even though verbal contracts are difficult to enforce in court, both parties should discuss enforceability. Adding the following elements to a verbal contract can improve its validity and enforceability:
One of the difficulties of verbal contracts is that it is hard to overcome the burden of proof if the issue is ever brought to court. However, this can be fixed if there is any proof that the contract was followed. One way this can be done is if the plaintiff presents evidence of one party performing their responsibilities of the contract, such as a person mowing the lawn that they verbally agreed to do.
If there is proof of payment, such as the other party paying the agreed-upon $20 for mowing the lawn, that can also prove that there was a verbal agreement. A person who was present when the verbal agreement was made can also serve as a witness to verify that there was indeed a valid agreement.
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