Understanding Oral Contracts vs. Written Contracts: What’s Enforceable?

Oral contracts can be binding but are hard to prove, so use written contracts to ensure enforceability and avoid disputes.

Introduction

You agree to hire a consultant over coffee, but when they don’t deliver, you realize there’s no written contract to enforce. Can you still take action? Many business owners assume only written contracts are binding, but that’s not always true. Revolution Law’s blog post, “Understanding Contract Claims: When Promises Become Legal Obligations,” explains that contracts need offer, acceptance, consideration, capacity, and legality to be enforceable. But what about handshake deals? This post compares oral and written contracts, highlighting when oral agreements hold up and why written ones are safer. By understanding these differences, you can protect your business from disputes. Let’s dive into what makes a contract enforceable, written or not.

Explanation

A contract is a legally binding promise, as Revolution Law outlines, requiring an offer, acceptance, consideration, capacity, and legality. Whether oral or written, a contract meeting these criteria can be enforceable. However, oral contracts come with challenges that written ones avoid.

Oral contracts are verbal agreements, like promising to pay a freelancer $1,000 for a website. If both parties agree and exchange value (work for payment), it’s binding. However, proving the terms is tough without documentation. If the freelancer claims you agreed to $1,500, it can be difficult to prove who is correct.

Written contracts, by contrast, provide clarity. A signed agreement spelling out all material terms, such as the price, the deliverable, and the due date, leaves little room for dispute. Moreover, some documents are covered by the Statute of Frauds, which requires that certain agreements must be written to be enforceable, such as contracts concerning real estate.

Oral contracts face another hurdle: evidence. Emails, texts, or witnesses can help, but they’re often incomplete. Written contracts, signed and stored, are your best defense in a breach. While oral contracts can work for small, low-risk deals, written ones reduce risk significantly.

Practical Tips

Protect your business with these five tips:

• Prefer Written Contracts: Use written agreements whenever possible for clarity, certainty, and enforceability.
• Document Verbal Deals: If you make an oral agreement, follow up with an email summarizing terms.
• Use Witnesses: Have a third-party present for verbal agreements to support your case.
• Know the Statute of Frauds, and make sure contracts are written when required.
• Securely store written contracts and keep records of communications.
• Consult a Lawyer: For high-stakes deals, have a lawyer draft or review your contract.

Conclusion

Oral contracts can be enforceable, but they’re risky without proof. Revolution Law’s post on contract claims highlights the importance of clear, binding agreements, and written contracts are the gold standard for avoiding disputes. A written contract saves time and stress.

Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.

The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.