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What Is a Verbal Contract?

A contract is a legal agreement that is binding onto the parties who have agreed to an exchange. A verbal contract is one that is written or spoken, as long as it is expressed in words. However, there can be 2 different interpretations of the term verbal contract. One interpretation is that a verbal contract is an oral contract, one that is spoken but not formalized into a legal document. Another interpretation is the actual definition of a verbal contract, one that is communicated in words, whether written or spoken.

A verbal contract as the latter interpretation is the most binding of all since it has been formalized and agreed to by all involved parties. Such a contract is binding until the terms of the contract are fulfilled. Usually this means that all parties have delivered on their promises. A breach of a verbal contract can lead to a court case wherein the plaintiff can sue the defendant for breach of contract or breach of promise. It is easier to bring this type of contract into court since there is evidence that all parties agreed upon the terms and that the defendant did not deliver based on these terms.

It is more difficult to sue a party for breach of contract or promise when the verbal contract is in the former interpretation, that of an oral contract. Because an oral contract was never formalized into a legal, binding document, it is difficult to prove that a breach occurred when there is no evidence or testimony to prove that the party did not deliver on the terms agreed.

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