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What are the elements of a verbal contract?

A verbal contract, like a written contract, may be considered valid if it contains the following basic elements:

  • An offer.
  • Acceptance of the offer.
  • Consideration, or something of value that will be exchanged.

Verbal contracts, however, can be easily contested when there is no other evidence of an agreement being made. Also, some contracts are legally required to be in writing. For example, contracts that must be in writing include: 

  • The sale of land.
  • A service that cannot be completed within one year.
  • Goods or services over a certain threshold dollar amount (typically $500, but this varies from one state to another).
  • Agreements to take on another person’s debts. 

Even when a written contract is required by law, a verbal agreement for one of these transactions can still be the basis of a costly lawsuit. 

Why are verbal contracts a problem?

The big problem with verbal contracts is the fact that their existence and their particulars can be difficult to prove if something goes wrong. If there is a dispute, taking the matter to court becomes more difficult as you may have to prove that the contract existed in the first place. If there are no witnesses or any documents supporting the claim, such contracts can easily be contested. Even if you can establish that a verbal contract or agreement existed, you then have to establish the terms. 

To prove a verbal contract exists, showing the actions of everyone involved can go a long way. Common sense dictates that a person or a business would not deliver the goods, or provide a service, or pay a fee, if an agreement did not exist. While actions may show that some agreement exists, the particular terms of that agreement may not be as clear. When terms are unclear, quality, quantity, frequency, or price changes can quickly lead to disputes.

How can I protect myself when making verbal agreements?

To be on the safe side, always get everything in writing and signed after making a verbal agreement. It is in your best interest to draft a General Contract for Products or a Contract for Services to document the sale of goods or services. Use a Bill of Sale to document the sale of a car, or a Purchase Agreement for Personal Property for selling other items. If you cannot avoid entering into a verbal agreement, here are some tips that can help you avoid a messy legal battle:

  • Collect secondary documents. Emails, text messages and any other form of written correspondence may help strengthen your case even if you don't have the terms of your agreement in a signed writing.
  • Write down the terms of your agreement and send a copy to whomever is involved in the contract. You may want to sign and send two copies, and request that one copy be signed and returned to you.
  • Find someone you can trust to be a witness to the agreement.
  • Make an audio or video recording of the agreement and as many of the terms as possible.

Remember, verbal contracts are legal and valid, and you can protect your rights by putting everything in writing and getting your agreement signed after making a verbal agreement. It is okay to ask someone to sign a written contract that clarifies the terms you already agreed upon. 

If getting an agreement signed is not possible, it can still help to send a copy of the agreement, or the main terms of the agreement, via email or text message to the person you made the verbal contract with. Sending the terms via email or text message provides some evidence of terms that were discussed and agreed upon, and can be helpful in case they need to be referenced, or if there is a dispute.

If you have more questions about verbal agreements and contracts, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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