Verbal Agreements

A verbal agreement, also known as a verbal contract, oral contract, or parol contract, is an agreement made between two or more parties through spoken communication rather than in writing. It is sometimes called a "handshake deal" because it relies on informal spoken terms without any written documentation.

For a verbal agreement to be legally binding, it must contain the essential elements of a contract:

• Offer: One party proposes terms.
• Acceptance: The other party agrees to those terms.
• Consideration: Something of value is exchanged between the parties.
• Capacity: Both parties must be legally competent (of sound mind and legal age).
• Legality: The subject matter of the contract must be lawful.

While verbal agreements can be legally enforceable, they pose challenges, primarily because proving the exact terms and existence of the contract can be difficult without written evidence. Courts often rely on witness testimony, the conduct of the parties after the agreement, and other circumstantial evidence to determine the contract's terms.

There are also limitations: certain types of contracts, such as those involving real estate sales, contracts lasting more than one year, or promises to pay another's debt, generally must be in writing to be enforceable under the Statute of Frauds.

In summary, verbal agreements are valid and legally binding if they meet contract requirements, but their enforceability can be complicated by the lack of written proof, making disputes harder to resolve.