Verbal Agreement vs Written Contract
Last updated: February 2025
Quick Comparison
| Aspect | Verbal Agreement | Written Contract |
|---|---|---|
| Evidence | Relies on memory and witness testimony | Clear written record of terms |
| Enforceability | Enforceable but difficult to prove | Enforceable with clear evidence of terms |
| Certainty | High risk of disagreement about terms | Terms are documented and accessible |
| Legal requirements | Not valid for land transfers, guarantees, or certain IP assignments | Satisfies all statutory writing requirements |
What Is a Verbal Agreement?
An oral contract formed through spoken words where all essential elements of a contract are present, including offer, acceptance, consideration, and intent.
Key Features
- • Legally binding if all contract elements are present
- • No written record of the agreed terms
- • Relies on witness testimony and conduct as evidence
- • Subject to the same contract law principles as written contracts
Best For
- • Informal, low-value arrangements between trusted parties
- • Quick agreements where formality is unnecessary
- • Situations where a handshake deal is culturally expected
What Is a Written Contract?
A contract recorded in writing and typically signed by the parties, providing a clear record of the terms agreed.
Key Features
- • Clear documentary evidence of agreed terms
- • Can be referred to in case of dispute
- • May be required by law for certain contract types
- • Provides certainty for both parties
Best For
- • Any business arrangement with material value or risk
- • Engagements where terms are complex or detailed
- • Situations requiring enforceability and clarity
When to Use a Verbal Agreement
Verbal agreements may suffice for minor, informal arrangements between trusted parties where the stakes are low. However, even in these cases, a brief written confirmation is advisable.
When to Use a Written Contract
Use a written contract for any arrangement with material value, risk, or complexity. This includes employment, commercial engagements, property, IP, and any situation where you would want to enforce the terms.
Which Does Your Business Need?
Always prefer a written contract for business dealings. While verbal agreements are legally valid in most cases, they are notoriously difficult to enforce because proving the exact terms is challenging. The cost of a written contract is almost always less than the cost of a dispute.
FAQ
Are verbal agreements legally binding in England and Wales?
Yes, in most cases. A verbal agreement is binding if it contains all essential elements: offer, acceptance, consideration, intention to create legal relations, and certainty of terms. However, some contracts must be in writing by law, such as land transfers, guarantees, and certain IP assignments.
How can I prove what was agreed verbally?
Evidence can include witness testimony, subsequent conduct, emails or messages referring to the agreement, partial performance, and any notes taken at the time. Courts will consider the balance of probabilities, but proving exact terms is inherently difficult.
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