Is a verbal agreement binding?

How effective is a verbal agreement? Is it binding? A lot of businessmen and women enter into verbal contracts without being entirely sure whether they’re valid, or how effective the contract is.

In general, South African law recognises verbal agreements. There are some exceptions to this. For example, a sale of property needs to be in writing, as does an ante-nuptial agreement. But unless there’s a statutory provision that says otherwise, oral agreements are, in theory, just as binding as written ones. In theory. The problem is that verbal agreements come with a lot of, well, problems.

The most obvious problem with a verbal agreement is proving its existence. He says there’s a verbal agreement in place. She says there isn’t. Who’s to be believed?

Then there’s the problem of proving the terms of the agreement. Both parties may agree that there is indeed an agreement, albeit verbal. But do they agree on the terms of the agreement? If the parties disagree on the price, services, deadline then that’s a problem that’s not easily resolved.

An additional problem revolves not around what’s been said, but around what hasn’t been said. By their nature verbal agreements tend to be rather thin on the detail. It’s often only when the parties are mid-way through the contract when the cracks start appearing. Forgetting about crucial details can derail the contract.

And if the verbal agreement starts unravelling, how does a person go about enforcing it, or suing the other party for damages? If you feel aggrieved you can still sue the other party based on your verbal contract. But first, you need to provide sufficient evidence to the court to prove the verbal contract exists (and prove its terms) before a court will consider awarding you damages. Do you have witnesses who heard you when the verbal agreement was formed? Was the agreement preceded or followed by any written evidence in the form of emails, letters, WhatsApp messages or SMSes? Even social media posts and messages can help you to prove the contract.

But at the end of the day, having a legitimate verbal agreement in place, and being able to prove that you have a legitimate verbal agreement in place can be two entirely different things.

The solution is simple. Wherever possible, try to avoid doing business by verbal agreement. Written agreements are always way, way more preferable. If you’re at a loss on where to find a written agreement template, hop onto Agreements Online and browse the template contracts and agreements that we have in our store.

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.