Are you thinking of having a verbal contract but are not familiar with how it works legally? Before you get into it, you want to know the ways around it to prevent problems later.
Verbal contracts refer to agreements with nothing written. Even so, they are legally binding and held up in court. But what else should you know about it?
Here are seven things to remember when dealing with a verbal contract.
1. Learn How They Hold Up in Court
Before you agree to a verbal contract, you should know how it works when you bring it to court. Many authorities find more validity in written agreements, so many recommend going for that instead. Either way, a verbal one is still legally binding with the proper evidence to support it.
Although the court honors them, the contract requirements include clear and proper documentation of dealings and proof of contract. This way, it becomes easier to enforce and prove later.
It’s also best to see how oral contracts work in other states to make sure you follow the proper guidelines.
2. Verbal Contract Validity
There are instances where a verbal agreement becomes invalid due to a lack of specific components. It includes the following:
Offers and Acceptances
You should be able to show that you proposed a contract that the other party agreed to and vice versa. It’s crucial for both parties to have documentation of offering and accepting a deal. Additionally, the kind of evidence you provide in court determines whether the agreement is valid.
Fair Consideration
Both parties should offer something of value in exchange for the other. Since a verbal agreement requires an offer and acceptance from both sides, it’s vital to ensure you have mutual and fair considerations.
Mutual Assent
When you offer, accept, and have a fair exchange, you should make sure there is mutual assent. This can change depending on how the deal goes and what evidence you have to support it. If there’s a lack of proof that the contract is mutual, the court will likely not honor it.
Clear Terms
It’s crucial for those involved in the verbal agreement to phrase terms in a simple manner. You want to avoid roundabout ways of explaining how the contract went. To do so, you should make straightforward statements in a language everyone understands.
Valid Circumstances
A verbal contract is not legally binding if one of the parties involved is a minor, wrongfully coerced, or mentally impaired. It brings about unequal circumstances, making the agreement unenforceable.
3. Keep a Written Copy
Even when you deal with a verbal agreement, it’s still good to have a written copy of your contract terms. When you have physical proof of your contract, it becomes easier to uphold it in court.
When you make a written copy, you want to include everything you agreed on. At the same time, it’s best to have another form of evidence to support those claims besides a personal document.
4. Understand the Burden of Proof
Although verbal contracts are nothing new, they can be difficult to prove in court. One party can take the other to court and sue them if they dispute a contract. But for a lawsuit, you should have evidence.
And so, you should understand what the burden of proof is and why it’s valuable for your contract. It refers to a legal standard that will determine if a claim is valid or not according to the proof you show.
In most cases, one party requires the burden of proof in a claim. The person who files the claim must demonstrate whether it’s valid, and carry the burden of proof.
5. Have Documents to Prove It
The primary evidence you will use when it comes to proving a verbal agreement are your documents. Receipts, transcripts, and other forms of documentation can be used, like photos, videos, or witness testimony.
Proper contract management includes keeping a record of every deal and progress you make in line with the agreement. This way, you know what to reference in court and are able to support it well.
6. Know When They’re Enforceable
Generally, verbal contracts are already enforceable under law but they require four factors to be considered true. The points are as follows:
- One party makes an offer
- The other party accepts the offer
- There’s an exchange of something valuable
- Both parties intend to make the agreement
It’s important to note that a verbal agreement can become invalid if you make a contract with someone who lacks the proper mental capacity to agree to the terms. For example, one party is a minor, has a mental illness, or is wrongfully or illegally coerced.
Besides this, there are other cases where the agreement becomes unenforceable. It includes marriage, selling goods over state-mandated amounts, and property transfers. It also becomes invalid when the contract names the executor of the will or when it’s used to ensure another person’s debt.
7. Consider Legal Assistance
It gets tricky to deal with a verbal agreement on your own, particularly when you aren’t too familiar with it. So, you want to consider going through commercial contract attorneys to assist you.
These professionals can help you create and document the contract and form terms that are fair and legal. Moreover, they can be your witness when you have to defend the agreement in court.
Some of the considerations you should make when hiring a contract attorney are as follows:
- Check their background
- Confirm their credentials
- View their experience
- See reviews and testimonials
- Get a cost quote
- Ask about their services
Evaluating an attorney before opting for their service ensures you get the best service for your case.
Understand How to Deal With Verbal Contracts Here
When you deal with verbal contracts, you should keep a few things in mind before you agree. It includes understanding how it holds up in court, its terms, and what you need to support it.
Note that these agreements can get harder to prove due to their nature, so you want to be sure you manage the contract well. To learn more, you can check out the rest of our blog!
