What is a verbal agreement?
A verbal agreement, also known as a handshake agreement, oral agreement, or oral contract, is a type of contract formed through spoken communication rather than a written document. The terms of agreement are discussed and agreed upon verbally between the parties involved.
Although this type of agreement is legally binding, it can be associated with certain enforcement difficulties since it may be challenging to prove its exact terms. As a result, verbal agreements are often used when a written contract is impractical, such as in casual or informal settings or when the parties have a trustful relationship.
What are the elements of a contract?
Every legally binding agreement must consist of four essential elements that make it a valid contract:
- Offer. The offer is the proposition made by party A to party B in exchange for something else. Let's say a bakery offers cupcakes in exchange for payment. An offer must be unambiguous to be legally enforceable.
- Acceptance. Acceptance occurs when party B agrees to the contract terms and must be unequivocal. A customer handing over money for a coconut cupcake is an explicit acceptance, whereas asking for either a coconut cupcake or a doughnut is not.
- Intent. The intent is another critical element meaning that both parties understand that they are entering into a legally binding agreement. This concept is also known as mutual assent or meeting of the minds, which is impossible when at least one of the parties is a minor or lacks mental capacity.
- Consideration. The consideration element refers to a product or service that's being traded. Without consideration, it's just a gift. For instance, if a bakery is giving out a free cupcake to a doctor on Doctor's Day, this is a gift since the doctor isn't expected to pay for the cupcake. On the contrary, when a customer pays $6.00 for a coconut cupcake and receives a coconut cupcake, the exchange of consideration takes place, and the contract is complete. In other words, consideration has to be something that has value.
When oral contracts aren't valid
Before explaining how to prove oral contract, there's one thing we want our readers to keep in mind: in some specific cases, oral contracts aren't valid.
In general, an enforceable contract is only possible when an offer has been made, someone has accepted it, there has been an exchange, and both parties have intended to make the agreement and haven't been joking or posing a hypothetical instance.
While most types of agreements are enforceable under the law, there are some situations where they aren't. First and foremost, a contract isn't enforceable if either party is mentally handicapped or a minor (under 18 years old in most US states). In addition, oral contracts are invalid in some specific cases. This legal concept is called "the statute of frauds" and stipulates that certain types of contracts must be carried out in writing to be valid:
- when the terms of the contract extend beyond the lifetime of either party
- marriage and divorce agreements
- selling or transferring real estate or land
- selling goods above $500.00
- if the period of time for the terms to be carried out exceeds one year
- if the agreement names an executor of a will
- a verbal promise to pay someone else's debt
How to prove oral contract in court
Let's face it: proving a verbal agreement in court can be a challenging endeavor. Even if both parties have a clear recollection of the agreement, it can be difficult to provide evidence of it, especially if there is no documentation. If you need to prove an oral contract, there are some steps you can follow to help your case. They can be helpful in various situations, whether dealing with a business contract or a legal dispute. So, how to prove a verbal agreement in court?
Firstly, you can prove an oral agreement by using evidence. This can be eyewitness testimony or written proof such as receipts, electronic messages, bills, or other documents backing up the terms of the contract. Also, you'll need to demonstrate that all the elements (offer, acceptance, intent, and consideration) were present in your verbal contract and that both parties meant to be bound by it.
Verbal agreement law
Besides some cases discussed above (marriage, land ownership, real estate contracts, etc.), verbal contracts are legally binding. While verbal contracts can be as valid as written agreements, their only problem is that their existence can be hard to prove.
The aggrieved party can bring a case to court and file a lawsuit against the other party for breach of contract. However, they'll need to prove that the contract existed. Oral contracts without strong evidence, such as eyewitness testimony or documentation, can be contested.
How can ProofKeep® help you prove a verbal contract
To avoid issues, experienced lawyers recommend executing agreements in writing. However, it requires preparation and isn't always convenient for the parties involved. The good news is that you can back up your oral agreement with evidence through the use of technology. The ProofKeep® mobile app acts as an independent witness, capturing audio, video, and photographic evidence of any situation that is important to you. Unlike video, audio, or photos captured in any application, ProofKeep® ensures that the proof remains authentic and untampered.
Summary
While oral contracts are valid in many settings, they require a careful approach. To be legally binding, a verbal agreement must contain all the essential elements of a contract, including offer, acceptance, intent, and consideration. However, in some cases, such as real estate transactions or agreements that outlast the parties' lifetime, handshake agreements have no legal power.
In case you come across a scenario where you need to prove the existence of an oral contract, there are several steps you can take, such as gathering evidence and demonstrating the presence of all the elements of a contract. To avoid the hassle of proving the existence of an oral agreement in the future, you can turn to ProofKeep™. Our solution can help capture and preserve evidence of verbal contracts, making it easier to prove their existence in court.
FAQ
Is it hard to prove a verbal agreement?
It can be hard to prove a verbal agreement in court if you can't provide eyewitness testimony or documentation to prove its existence.
What makes a verbal contract valid?
For a verbal contract to be valid, there must be an offer, an acceptance of that offer, and consideration. Moreover, the terms of the agreement must be specific and clear.
What makes an oral contract enforceable?
An oral contract can be enforceable if it meets the exact requirements as a written contract, including the offer, acceptance, consideration, and specific terms. The existence of the oral contract must also be proven in court.
How do you prove the existence of a verbal agreement?
To prove the existence of a handshake agreement, one can provide evidence such as witness testimony, emails, text messages, or recordings.
