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When Does a Verbal Agreement Become Legally Binding

April 17th, 2023

When Does a Verbal Agreement Become Legally Binding?

A verbal agreement is a promise or a contract made between two parties without any written documentation to support it. These agreements are common in everyday life and can range from agreeing to meet for lunch to larger agreements involving business transactions. However, the question that arises is, when does a verbal agreement become legally binding?

The answer to this question is not straightforward as it depends on the circumstances. Generally, for a verbal agreement to be legally binding, it must meet certain conditions that make it enforceable in a court of law. Here are the factors that determine the legal validity of a verbal agreement:

1. Offer and Acceptance

The first condition of a legally binding verbal agreement is that there must be an offer and acceptance. This means that one party must make an offer to the other party, and the other party accepts that offer without any changes. The agreement must be clear and unambiguous, and both parties must be aware of the offer and acceptance.

2. Intention to Create Legal Relations

The second condition is that both parties must show an intention to create legal relations. This means that both parties must understand that their agreement is legally binding, and they are willing to be legally bound by it.

3. Consideration

The third condition is that there must be consideration. Consideration refers to something of value that is exchanged between the parties. This can be money, goods, services, or something else of value. Both parties must provide consideration to each other for the agreement to be legally binding.

4. Capacity and Consent

The fourth condition is that both parties must have the legal capacity to enter into the agreement. This means that both parties are of legal age and are mentally and emotionally capable of entering into the agreement. Additionally, both parties must give their consent to the agreement freely and without any duress or coercion.

5. Enforceability

Finally, the agreement must be enforceable under the law. This means that the agreement must not violate any statutes or regulations, and it must not be against public policy.

In conclusion, verbal agreements can be legally binding if they meet the above-mentioned conditions. However, it is always better to have a written agreement to prevent any disputes or misunderstandings. Written agreements provide more clarity and detail, and they can be used as evidence in court if the need arises. Therefore, it is advisable to get any agreements in writing, even if they started as a verbal agreement.

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