What is an Oral Contract in Business?

An oral contract, also known as a verbal contract, is a legal agreement made between two parties through verbal communication. Unlike a written contract, an oral contract is not documented in writing but is instead spoken out loud and agreed upon by both parties.

In business, oral contracts can be used for a variety of purposes. They may be used to establish an agreement between a business owner and a supplier, to negotiate the terms of a job offer, or to establish a project timeline between a client and a contractor.

While oral contracts may be common in business, they can be difficult to enforce due to their lack of documentation. Without written evidence of the agreement, it may be challenging to prove what was agreed upon or even that an agreement was made at all.

In some cases, oral contracts may be enforceable in a court of law if the parties can provide evidence of the agreement. Evidence may include emails, text messages, or witness testimony. However, it can be challenging to prove the terms of an oral contract without written documentation.

To avoid potential conflicts and legal issues, it is best to document all business agreements in writing. A written contract provides clarity and can help ensure that all parties understand the terms of the agreement. This can help prevent miscommunications and ensure that all parties are on the same page.

In summary, an oral contract is a legal agreement made between two parties through verbal communication. While oral contracts may be common in business, they can be difficult to enforce due to their lack of documentation. It is best to document all business agreements in writing to avoid potential conflicts and legal issues.