Businesses and individuals are often mistaken as to the enforceability of verbal contracts (also referred to as oral contracts, oral agreements or verbal agreements). Whilst a documented agreement can assist a party in establishing more definitively what the terms of an agreement were, simply because an agreement has not been reduced to writing may not mean that there is no contractual obligation.
The underlying principles of contractual formation (Offer and Acceptance, Intention to Create Legal Relations, Consideration etc.) are generally quite easy to identify on a factual basis, however the difficulty that parties often face with oral agreements is demonstrating that there was ‘certainty of terms’ – or at least the one they are trying to enforce.
For those readers who have been involved in a dispute relating to oral agreements, you will be aware that certain information is required under the Civil Procedure Rules (PD16 7.4), being:
The Contractual words used;
- By whom they were said;
- To whom they were said; and
- Where and when they were said.
As such, any party who is entering into an oral agreement, or has recently entered into an oral agreement, may think it prudent to take a note of this information.
Similar problems may be faced by parties seeking to rely on a contract which is established by a chain of conduct rather than expressly documented terms.
While some terms are implied (treated as being part of the agreement whether expressly agreed or not) by statute, and others may be implied for efficacy, the Court will be generally reticent to infer terms into a contract simply because a contract may not have been a ‘good bargain’ for one party or the other.
A common area for dispute with oral contracts is whether there is a question of mistake, either by an individual party or a mutual mistake, which could cause uncertainty as to what the actual contractual obligations were in the first instance.
A final area where parties commonly come unstuck in relation to oral agreements is where they have entered an agreement which can only be given legal effect if it has been reduced to writing – such as the transfer of land.
In these instances, whilst any transfer may be void, there may still be underlying arguments for trusts having come into existence. These forms of disputes can often be complex and heavily contentious – particularly where the underlying property has increased / decreased in value – and as such if any party is considering any sort of transaction of this nature they may think it prudent to take advice to ensure any transaction is perfected in the first instance.
Can I transfer land with an oral agreement?
Some types of transfers can only be given effect in writing, such as a transfer of land – while legal title may not have passed, beenficial title may have and a trust come into existence.
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Whether you are looking to recover money, goods, compel a party to comply with a contractual obligation, defend against allegations of breach of contract, or are seeking to extract yourself from a contract you now cannot comply with, Bishop & Sewell have a team of lawyers able to advise you on the options which are available to you.