In the business world, agreements are a critical part of conducting transactions. When two parties decide to enter into a business arrangement, they typically put their terms and conditions in writing to avoid any confusion or misunderstandings in the future. But, what happens when a transaction is based on an oral agreement rather than a written contract? This is where the question of the legal validity of an oral agreement arises.
An oral agreement to sell is a verbal contract between two parties, where one promises to sell something to the other. In these types of agreements, the terms and conditions of the transaction are discussed and agreed upon verbally, with no written documentation to confirm the agreement. While an oral agreement may sound simpler and less burdensome than a written one, it has its shortcomings.
Disputes may arise when either party denies the existence or the terms of the oral agreement, leading to a “he said, she said” situation. In such cases, the court`s decision will depend on the credibility of witnesses and the evidence presented. Witnesses who have heard the parties discussing the agreement, or correspondence referring to the oral agreement, can be helpful in proving the existence of the oral agreement. However, it is essential to remember that the burden of proof is on the party alleging the oral agreement`s existence.
There are several factors the court will consider when determining the validity of an oral agreement to sell. Firstly, the court will consider the intention of the parties. Did the parties intend to enter into a legally binding agreement? If so, what were the terms of the agreement? Secondly, the court will look at the agreement`s subject matter. Was it a simple or complex transaction? Thirdly, the court will consider if there was any consideration for the agreement. Did each party give something of value to the other? Finally, the court will examine any evidence of performance. Was there any performance of the agreement? Did one party start performing before the other reneged on the purported agreement?
It is essential to note that oral agreements for the sale of land or goods over a certain value require a written agreement to be legally valid. However, in some jurisdictions, there are situations where oral agreements for the sale of goods may still be enforceable.
In conclusion, an oral agreement to sell can be a cost-effective and straightforward way of conducting business. Nevertheless, it is essential to note that the legal validity of oral agreements is open to dispute, and it is always advisable to have written documentation. In situations where an oral agreement is the only viable option, it is crucial to ensure that all parties are clear on the terms of the transaction, and contemporaneous documentation is kept. This will improve the chances of the oral agreement being deemed legally valid in the event of a dispute.