Is Verbal Agreement Legally Binding? 2 years ago

A verbal agreement, also known as an oral contract, is when two or more people agree on something through oral communication without putting them in writing or documentation. 

Is verbal agreement legally binding?

Yes, it is as valid as written contracts–because any agreement, whether written or not, shall be considered a contract. The mutual understanding will now put both parties responsible for fulfilling the terms of the contract.

One instance is when you promised to lend your friend some cash on the premise that he would repay you at the end of the month, after he had borrowed money from you.

The only issue with verbal agreements is that it may be challenging to establish their existence and the specifics of the agreement. These contracts may easily be disputed without witnesses or supporting documentation but note that in reality, you can be a witness.

How to prove a verbal agreement?

In legal proceedings involving verbal agreements, it is frequently necessary to prove that one or both parties rely on the agreement. It would also help to have a witness, proof of a transaction, or any substantial documentation about the agreement. These can be text messages or Facebook conversations about the topic. Others are for contracts if you made a bank transfer or Gcash transfer.

But do note that whether verbal or written, it will be considered valid if it contains the following elements:

1. Offer and Acceptance

A party must make a reasonable and clear offer, and the other party must accept it for there to be a contract.

2. Consideration or exchange of something of value

Something of value has been given up in exchange for the contract. This can be in money, services, etc., and should be legal. 

3. Certainty and Mutual Consent

Both parties must agree and be aware of its terms which cannot be ambiguous or lacking in detail, and should clarify their responsibilities, the price to be paid, etc. 

4. Legal Capacity

Both parties shall be in a proper state of mind to comprehend the terms of the agreement–this also includes being at a legal age. Although there are case exemptions for minors, neither of the parties must be under the state of influence, coercion, or intimidation.  

5. Legal and Fair

The contract must comply with the law and with no one extorting or otherwise taking advantage of the other.

When are verbal agreements not legally binding?

A verbal agreement may not be legally binding in certain circumstances, especially those that need a contract such as:

• Sale or transfer of land or real estate

• Marriage agreements

• The contract takes a lifetime to complete (i.e., copyright)

• Interest rates

For further questions about legally binding contracts, you can consult with our legal experts. 

Entering into a verbal agreement is inevitable, especially since not everyone knows how to draft a contract. However, it is always advisable to put everything in writing because it is in your best interest to have a contract and avoid legal disputes.

Should you need a contract, visit Digest.ph, which you can access and customize every time you need one.