Is a verbal contract valid?
A contract can be either in writing or agreed to verbally. There are a few exclusions to this such as real estate contracts and contracts of guarantee – they must be in writing. The issue with verbal contracts is that they are hard to enforce and that is why most contracts are in writing.
A verbal contract does not clearly outline what the rights and responsibilities the parties have under the contract and whether there is a breach of those. It is always best to enter into a written contract to protect yourself if something happens.
If you have entered into a verbal contract the essential elements of a contract need to exist for it to be a contract. These are acceptance/offer; intention to create a legal relationship and consideration (money).
You can take steps to validate a verbal contract and some of these are:
- confirming the discussions in writing by email or letter to the other side;
- keeping records of supporting documentation such as quotes, emails, letters and text messages;
- recording work being done and any payments being made or received for the work; and
- taking diary notes of any phone calls and communications with the other party.
Taking these additional steps will assist if a dispute arises and there are any claims in future for liability etc.
It is important to have clear written agreements and contracts in place if you routinely do work for other parties so that all parties have a clear understanding of what is expected. A contract lawyer can prepare these contracts for you so that you are protected in the course of your business.
If you need legal advice, we can be contacted on 1300 907 335 or via the contact form on this page.