Oral contracts are actually quite common in business, and they hold every bit as much legal weight as written ones. However, there are difficulties inherent in oral contracts, most notably enforceability. If you are entering into an important contract with another company it is important that you consult with a Bryan business attorney.
What Is an Oral Contract?
Contracts are promises made that are legally binding. An oral contract is one that is not in writing, but that is made with all the promises and expectations of a written one. The parties of a contract are the promisor and the promisee. For any contract to be valid a number of elements must be satisfied:
- An offer must be made.
- There must be a “meeting of the minds” between the two parties.
- Both parties must agree to the terms.
- A consideration must be made. This means that both parties get something as a result of the contract. If, for instance, a service is rendered, the one party renders the service for an agreed-upon cost, and the other party enjoys the fruits of that service.
- The contract must be executed and delivered with the intention of being mutually binding.
What Problems Are There with Oral Contracts
The basic dilemma that can grow out of an oral contract is that if one party does not abide by the terms it may be difficult to prove that a contract existed in the first place. It may come down to one person's word against another. Thus, written contracts are generally preferred over oral ones. If two parties do enter into an oral contract, though, it is important that there be individuals who can witness to the fact. Also, certain documents can help prove the contract, such as subsequent written correspondence between the parties which refers to the contract.
Are There Legal Limitations on Oral Contracts?
Not at agreements can be made orally and be considered legally binding. Some of these are:
- Sale of real estate
- Oil and gas mining leases
- Loans in excess of $50,000 by financial institutions
- Marital agreements
Work with an Attorney if You Are Creating a Contract
If you believe there may be a problem down the line with an oral contract, it is better to put it in writing. However, if a business contract is of any significance it is very important that you work with a Bryan business lawyer who can help ensure that all the terms are correct and the contract is solid. Call Peterson Law Group today at 979-703-7014 or 936-337-4681.