Can a verbal contract be legally binding?
All countries have laws regarding what elements are required for a contract to be legally binding. Due to the need to contracts to be standard in business transactions, the law of the UK on this point is standard across the UK and much of the world. For a contract to be legally binding under UK law, there are five key elements which must be present.
- Capacity to enter legal relations
- Intention to create legal relations
Often added to this is a final element – the lack of any vitiating factors. There is nothing in these elements that requires the contract to be in writing. A contract may be entered into on the basis of verbal statements and representations, and even on the basis of the parties’ conduct.
There are, however, some exceptions to this rule that contracts may be verbal. Under UK law, specific types of contracts are required to be in writing. These include:
- Employment contracts
- Tenancy agreements
- Contracts for consumer credit
In some instances if there is no written evidence of these types of contracts, they may be either void or unenforceable. In some circumstances, it may be unenforceable by only one of the parties.
Verbal contracts are usually fine until disputes arise. If there is any dispute regarding the terms of the contract, there is often little to fall back on to resolve the dispute. If the matter goes to court, the court will usually look at the history of the statements made by the parties and to their performance. They may also piece together various written communications between the parties, such as emails, letters, order forms, invoices, receipts and memos.
If you have a contractual dispute regarding a verbal contract, it is advisable to seek legal advice from a commercial solicitor, as these types of disputes can become complex. A commercial solicitor will be able to point you towards things that may be used as evidence. If the matter goes to court, a commercial lawyer can represent you in negotiations and before the court.
If you would like to obtain legal advice on verbal contracts, Caven can put you in touch with a local specialist commercial solicitor free of charge. So, if you have any questions or would like our help in finding local commercial solicitors please call us on08001 221 2299 or complete the web-form above.