Too often in contractual verbal situations, the evidence turns into a “he said, he said” situation that makes it difficult to know exactly what was agreed between the parties to the oral contract. As a general rule, the parties do not agree on what the terms of the contract were or how they should be interpreted. Without a written agreement, it is often the word of one party against another. We therefore recommend avoiding oral chords. However, if you enter one, we advise you to send an email or letter to the other party confirming the agreed terms. The more written documentary evidence you have, the better your chances of obtaining oral agreement. Clients often think that oral agreements are not binding. However, as a general rule, the law considers oral agreements to be legally binding. Although there are some exceptions (for example. B transaction agreements between employers and employees or agreements for the sale and purchase of land), oral agreements may be applicable. This is not to say that oral contracts should be opted for. A letter is always better and the costs and turbulence of trying to get a verbal agreement are quickly evident. Such useful clauses, such as the provision of arbitration and mediation or legal fees for the dominant party, may be included in a written contract and cannot be applied in an oral contract.
This does not mean that, in many cases, oral contracts are unenforceable – difficult to prove. These types of contracts must be written or are unenforceable (except one). For example, employers, workers and self-employed contractors may consider it invaluable to document the terms of their agreements in an employment contract or service contract. While a verbal agreement may be legally enforceable, it can be difficult to prove in court. The second element necessary for written or oral agreement is “reflection.” Reflection is essentially the reason behind the agreement or what the other party gets in exchange for the oral agreement. It is often money or services; But that can go as far as almost anything. In some cases, it has been found that “love and affection” are a good consideration for a binding agreement. In addition to the previous four elements, the rights and obligations of each party must be recognized and enforced by the agreement so that written or oral agreements can be considered binding. When it comes to oral agreements, there are three common security issues that often arise: most of us know the effects of a written contract. However, some people will be surprised to learn that binding agreements in Australia do not need to be written.