Verbal agreements are common. They happen in casual chats between friends or in discussions over the phone with business contacts. But are these agreements legally binding and enforceable in the UK?
In this article, we explore the legal status of verbal agreements, what they need to be legally binding, and the challenges they present in legal proceedings.
Table of Contents
Is a verbal contract legal in the UK?
Verbal contracts are legal in the UK, except for certain:
Employment contracts
Transfers of real property
Transfers of company shares
Assured shorthold tenancy agreements
Standard occupation contracts.
Legal verbal agreements must have all the characteristics of a legally binding agreement.
That is:
One person has to make an offer, and the other has to accept it.
Something valuable should be exchanged for the promise made.
Both parties should intend for the agreement to be legally binding.
Do verbal agreements stand up in court in the UK?
Verbal agreements can stand up in court but they must have all the elements of a legally binding agreement and there must be strong evidence to prove this.
If a matter relating to a verbal agreement does end up in court, the judge will look for evidence to prove that there was a verbal agreement, such as:
Witness statements
Emails confirming the discussion
Proof of payments
Meeting notes
The actions of either party.
Once all this evidence is presented, they take a common sense approach to making a decision.
How to make a legally binding verbal agreement
To make your verbal agreement legally solid, it's best to turn it into a written contract as soon as possible after your discussion to lock in the details of your agreement.
During your talks, make sure you're clear on:
Who will do what and when?
What's being exchanged for the promise made?
What happens if one party doesn't follow through?
Since evidence of the verbal agreement is important should the matter go to court, it's smart to follow up any verbal agreements with an email or letter summarising what was discussed and agreed upon.
This way, even if you don't have a written contract (though you really should!), you'll have proof of the verbal agreement.
And remember, if you make any changes to the agreement, make sure to document them.
What are the disadvantages of a verbal contract?
The main problem with verbal contracts is that there's no clear record of what was agreed if there's a disagreement. People's memories can be unreliable, and it's easy for details to get mixed up or forgotten.
Verbal agreements can also be open to interpretation, leading to confusion about what was agreed upon. On the other hand, written contracts use clear, specific language to outline the terms of the agreement, reducing the chance of misunderstandings.
To protect yourself and ensure your agreement is legally sound, it's best to have a written contract in place.
If you're unsure how to do this, our network of expert commercial solicitors can draft your contract, or review one before you sign it.
Contact us today for a fixed-fee quote for our expert solicitor services.
How do you prove an oral agreement?
When there's no written proof of an agreement, it's your word against theirs, which isn't ideal.
But sometimes other evidence may suggest an agreement, like emails or texts discussing it.
Another way to show there was an agreement is by pointing out actions the other party took that seem to confirm it.
For example, suppose you verbally agree with a supplier to buy a certain amount of goods at a specific price. Although there's no written contract, the supplier starts preparing the goods for delivery and sends invoices for the agreed-upon amount. In this scenario, the supplier's actions can act as evidence of the verbal agreement.
What should you do if you have a verbal contract?
If you've made a verbal agreement but are uncertain about its legal standing, it's wise to ask for the agreement to be written down as soon as you can. But the other person isn't obligated to agree to this.
If they decline, it might raise concerns about future agreements with them.
In this case, start gathering evidence to support the existing agreement, just to be prepared should a dispute crop up.
How can Lawhive help?
At Lawhive, our team of skilled solicitors is ready to assist you in drafting or reviewing contracts after a verbal agreement, ensuring your interests are protected and everything is clearly defined.
If you're facing a dispute arising from a verbal agreement, we can help resolve it through mediation or represent you in court if needed.
Contact our Legal Assessment Team for a free quote for an expert solicitor today.