An oral agreement is a legally binding contract that is made between two or more parties without any written documentation. Although these agreements are not recorded on paper, they are still enforceable by law. Because oral agreements are not as formal as written contracts, they are often subject to more scrutiny during legal disputes. Therefore, it is important to understand the basics of oral agreements before entering into any such agreement.
The main benefit of an oral agreement is its simplicity. It allows the parties to come to a quick and easy understanding, without the need for lengthy negotiations or the expense of a contract lawyer. However, due to the lack of written documentation, oral agreements can be difficult to prove in court.
To ensure the enforceability of an oral agreement, it is important to follow certain guidelines. Firstly, the agreement must include all necessary terms and conditions, including the scope of work, payment terms, and deadlines. Secondly, the parties must clearly indicate their intention to enter into a binding agreement. This can be done through statements such as “I agree” or “I accept.” Finally, it is important to have a witness present during the agreement, who can attest to what was discussed and agreed upon.
In order to protect oneself when entering into an oral agreement, it is advisable to record the conversation, preferably with the consent of the other party. This can be done through audio or video recording, or even a written transcript. It is also important to avoid oral agreements in situations where written contracts are the norm, such as in real estate or high-value transactions.
In conclusion, oral agreements can be a useful tool for quick and easy contracts, but it is crucial to follow certain guidelines to ensure their enforceability. It is also important to remember that oral agreements are subject to more scrutiny during legal disputes, making written contracts a safer choice for high-value transactions.