Contract Glossary
Oral Contract
Definition
An oral contract (also called a verbal contract) is an agreement made through spoken words rather than written documentation. Despite popular belief, oral contracts are legally binding and enforceable in many situations. However, they are significantly harder to prove in court because there is no written record of the agreed terms. Certain types of contracts must be in writing under the Statute of Frauds, including real estate transactions, agreements lasting more than one year, and contracts for goods over $500 (UCC).
In Practice
A homeowner verbally agrees to pay a handyman $2,000 to repaint the exterior of the house over two weekends. The handyman buys $400 in paint and completes the work. When the homeowner refuses to pay, the handyman can pursue the claim in small claims court. The key challenge is proving the agreed price, text messages discussing the project, witness testimony from a neighbor, and the receipt for paint all become critical evidence.
Example Clause
This provision illustrates why written contracts matter, there is no example clause for an oral contract because nothing was documented. A written confirmation of an oral agreement might read: 'This letter confirms our verbal agreement of [Date] whereby Party A agreed to provide [Services] and Party B agreed to pay $[Amount] upon completion.'
Common in these contract types
Related contract clauses
Frequently asked questions
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