LAW CHEK Legal Form Books: What is an oral contract?

This is not a substitute for legal advice. An attorney must be consulted.

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What is an oral contract?

An oral contract is usually something verbal between parties. The oral contract may and usually does consist of a mere conversation that may be specific as to the intent of the parties, or it may be a general consensus or agreement. An oral contract can actually be created without the spoken word. Even though an oral contract may not involve a written document, written evidence may be introduced in order to establish the contractual relationship or to substantiate the position of the parties. Written documentation evidencing the prior oral agreement or contract does not make the contract a written contract unless the specific memorandum, letter, or other written document is mutually adopted by the parties.

An oral contract has a legally binding effect under the law so long as the elements of contracts such as promise, consideration (a monetary matter), an agreement to act or a forbearance are parts of the agreement and such agreement was reached by consenting individuals who had the capacity to legally obligate themselves.

The fact that a contract is oral does not minimize the fact that it is a legal relationship consisting of the rights and duties of the contracting parties. With basic elements such as legal consideration, mutuality of agreement and mutuality of obligation, a contract may be reached orally.

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This is not a substitute for legal advice. An attorney must be consulted.