A lot of small businesses take pride in the strength of the relationships that they’ve built not only with their clients, but also with their suppliers and other entities with which they do business. That’s why a lot of small business owners forego the formality of a written contract when they engage in business transactions.
While the perception is that this may save time and money, the opposite could be true. After all, in many instances verbal promises aren’t deemed to be legally valid.
Can a verbal promise be considered a binding contract?
Yes, but it really depends on the circumstances. In order for a verbal agreement to be considered legally binding, the following elements have to exist:
- An actual offer has to be made
- That offer has to be accepted
- Consideration must be given, meaning that both parties agree to give something to the other
- That consideration has to have value
- Both parties must consent to the verbal agreement
- The terms of the agreement are specific
There are other factors that may come into play here. For example, if you and the other party have operated on verbal promises for a long time, then it’s more likely that a new verbal promise will be considered a legally binding contract.
Just remember that it can be hard to prove all of the elements of a verbal promise and how it was broken. After all, there’s no physical evidence. That’s why it’s almost always in your best interests to secure your business agreements in writing.
Do you need help navigating a contract issue?
Contract disputes can be highly contentious given the stakes involved. That’s why if you’re dealing with a disagreement stemming from a business arrangement, then you should consider discussing your situation with an attorney who can help you protect your interests.