Understanding the Fundamentals of Contract Law
Kan Law
Paralegal
Introduction
A contract is a legally binding agreement between parties that sets out terms governing their relationship, setting out the parties’ responsibilities and obligations.
The next immediate question that comes to mind is likely to be: was the contract legally binding in the first place? What more if the agreement was made verbally?
Fret not — you’re not the first person with these concerns and certainly won’t be the last.
Essential Elements of Contracts
For a contract to be legally binding, five basic elements must be present:
- Offer – one party making a clearly defined object or service that is being offered;
- Acceptance – the other party accepts the offer;
- Consideration – there is an exchange of promise for something of value;
- Capacity – the parties demonstrate the legal capacity to enter a contract; and
- Intention to be legally bound – both parties must be intended to be legally bound by the contract.
Once all the above elements exist, the parties form a legally binding contract—unless a vitiating factor, like misrepresentation or illegality, undermines its validity.
However, assessing the above elements can be tricky, especially when the parties made the contract verbally.
Is a verbal contract valid in the UK?
It is not uncommon that verbal contracts often become an issue when parties fall out, agreements fall through, or one party has misunderstood the other. In many occasions, contracts are formed via phone calls or over a coffee chat.
Verbal contracts are valid in the UK and do hold up in court. However, where you may encounter difficulty in proving the terms of the contract, for which you’ll need to provide evidence to the court.
So how does a court of law know who to believe when there is a dispute of a verbal contract? In civil cases, the standard of proof is at “balance of probabilities”, which means a party only requires the slightest tip of the balance to win the case.
The court will first look at the evidence to assess the existence of a verbal contract. This could include witness statements, emails, and other correspondence to confirm the discussion, proof of payments, and meeting notes.
Therefore, gathering information and evidence is crucial to establish your version of story in the court.
What Should I Do If I Have a Verbal Contract?
Some types of agreements must be made in writing. For example, contracts involving real property or shares require a formal written deed. If you’re unsure about a verbal agreement’s enforceability, convert it into a written contract for clarity and legal protection.
Resolving Verbal Contract Disputes
Before questioning a verbal contract’s enforceability, consider resolving the dispute through negotiation, a solicitor, or mediation.
Verbal contracts are harder to prove in court, so getting expert advice is crucial if legal action becomes necessary.
Conclusion
Ensuring your agreements are legally enforceable is critical. A legally binding agreement requires an offer, acceptance, intent for legal relations, and consideration to be legally valid and enforceable.
Verbal agreements can lead to uncertainty, so it’s important to document key terms in writing to ensure clarity and legal protection.
In the event of a dispute over services, speaking with a solicitor is a crucial first step, regardless of whether court action is expected.
Our experienced contract lawyers are also available to help formalise early-stage verbal agreements into legally binding written contracts, safeguarding your interests from the outset.
For specialist advice and support. please get in touch with our divorce solicitors in London now by calling 020 7139 9266 or contacting the GOOD LAW INTERNATIONAL office.
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