Is an Oral Contract Binding?

A contract requires three things: an offer, an acceptance, and consideration. You’ll notice one thing missing from this list; a contract is generally not required to be in writing. While there are a few types of contract that must be written to be enforceable, contract formation at its most basic only needs for someone to offer a promise or performance to another, and for the person receiving the offer accepting it in exchange for his or her own promise or performance. That’s it. Any time these elements are present, a contract exists, whether or not you put it in writing.

richmond-business-lawyerSo why bother with written contracts at all? This is to keep the lawyers paid right???

The problem with oral contracts is proving their terms. Without a single document to look to for terms, identifying the parameters of the actual agreement becomes difficult. What was actually offered? Was there a counter offer? Do we have completely different recollections of what we agreed to? What performance date was agreed to? Which of the conflicting emails describe the details of the final agreement? Do any of the things said in previous emails carry over to that final email? What about what was said in phone calls that there is no written record of? It is not impossible to prove the terms of an unwritten contract, but unraveling the mystery and satisfactorily demonstrating the terms of the contract when they are not clearly written can be expensive and time consuming.

A written contract keeps everyone on the same page. See what I did there?

To save your time and sanity, it’s better to put your contract in writing. Once you’ve mapped out your agreement you not only have greater certainty, but can better identify the risks inherent in your agreement and account for them.


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