One of the first things my mentor told me ten years ago in the real estate industry was, „Never negotiate verbally.” For an oral agreement to be binding, the elements of a contract in force must be present. To illustrate how the elements of a contract create binding terms in an oral agreement, we use the example of a man who borrows $200 from his aunt to replace a flat tire. The contract, also known as the „intention to be bound”, must clearly and unambiguously demonstrate that the parties concerned agree with the conditions set out in the treaty in good faith. This is essentially the „promised part” of the agreement, under which the parties agree to be legally bound by their terms. In the case of written contracts, this is usually indicated by a signature below a carefully formulated statement. In oral treaties, this is a little more difficult, because the wording must be explicit (not „maybe”). A contract is indeed concluded at this stage from a legal point of view, because contracts are a formal indication of an agreement. To win the case, the aunt must prove that her nephew borrowed the money with the intention of repaying it, while the nephew must prove that he did not accept such a thing. Without documentation of the agreement, it becomes a matter of he-said-she-said. Ultimately, it is a judge who decides which case the party is most likely. With respect to the need for „certainty,” oral agreements often fail here in court. Even in my seminar experience, the need for „certainty” raises two challenges: when someone said, „Okay, deal,” they wondered aloud if they had a binding agreement.
Many people rely on chords that are not reduced to writing in everyday life. In fact, many agreements are not even concluded orally. For example, it is simply expected that if you ask someone to provide you with a good or service, you agree that you will pay for that good or service. The basics of oral and written contracts are the same. Examples of necessary elements of a contract are an offer, acceptance, consideration and certainty of conditions. In most cases, if the elements of a contract exist, an oral contract is binding on the parties, but there are some exceptions. A lawyer could argue with me and draw attention to a scenario in which an oral agreement could be binding for the purchase and sale of real estate, but I would quickly ask, „What legal hurdle does it take for the buyer or seller to be resolved?” So why do lawyers insist so much on writing down your agreements? In fact, one participant at a seminar where I had a recent appointment referred to an oral agreement she had reached when she said, „An agreement is an agreement. Case closed! But I think the seriousness of a person`s offer or counter-offer can be determined by whether they negotiate verbally or on paper. Is an oral agreement binding? The case law has proposed that this should be the case; a contract is a contract, even if it is not in writing.