Oral Contract Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Oral Contract, written in plain English, along with examples of how it is used.

What is Oral Contract?

It refers to the contract made by oral communicaton or made verbally and has not been incorporated in writing. They are as valid as written agreement but have less weightage than the written contract. Oral contracts bind the two parties but usually there is no proof of the binding when theres any descripancy.

History and Meaning of Oral Contract

An oral contract is a legally binding agreement that is made verbally, without written documentation. The use of oral contracts dates back to ancient societies where writing was not in use, and agreements were made through verbal communication. The formation of oral contracts depends on the acknowledgment and acceptance of the terms of the agreement by both parties, which can be challenging to prove in the absence of written evidence.

An oral contract is as valid as a written contract, but it is less preferred in the legal system, as they are challenging to prove and enforce, especially when there is a dispute between parties. Courts require clear and convincing oral evidence, such as witnesses or audio recordings of the agreement, to develop the terms of the contract.

Examples of Oral Contract

  1. When selling a used car, the buyer and seller agree on the price and exchange of money verbally without written documentation.
  2. In a business meeting, two parties discuss a project's terms and agree on specific deadlines and deliverables without signing any paperwork.
  3. During a real estate transaction, a buyer and seller orally agree to the purchase price and other terms of the sale without putting anything in writing.

Legal Terms Similar to Oral Contract

  1. Written contract: A written agreement that is documented in writing and signed by all parties involved.
  2. Express contract: A contract where the terms are specifically agreed upon by both parties.
  3. Implied contract: A contract where the terms of the agreement are inferred by the actions of the parties involved.