A verbal agreement (also known as a verbal contract) is a form of agreement that relies on spoken communication. From a legal standpoint, with the exception of contracts that must be in writing according to a state’s statutory provisions such as a Statute of Frauds, verbal agreements are as valid as written contracts. In the event of a breach of contract, however, proving a verbal agreement in court can be difficult and may depend on the type of contract and your jurisdiction.

 

Want to know more about verbal agreements? Here’s how these contracts work, when to use them, and how to protect yourself when making them.

 

How Do Verbal Agreements Work?

 

In order to be considered legal, a verbal agreement must contain the following elements:

 

• An offer
• Acceptance of the offer
• Something of value to be exchanged

 

In addition to these elements, the parties must demonstrate an objective manifestation of intent to enter an agreement. Objective manifestation of intent is demonstrated by the parties’ words, conduct, and actions that must objectively indicate their intent to enter into a contract. For example, if it is demonstrated that one of the parties is jokingly indicating they want to buy or sale something, then the requisite objective manifestation of intent would not exist, and the contract would not be considered by a court to be valid.

 

Some types of contracts are legally required to be in writing. For instance, a contract involving selling real estate must be in writing to be legal. Some verbal agreements are only legal if they’re evidenced by a written contract. This involves hashing out the terms of the verbal agreement, and then putting down those terms in writing.

 

Over the years, the enforceability of verbal agreements has been a matter of much controversy. One popular example occurred in the 90s, when actress Kim Basinger verbally agreed to star in a movie called Boxing Helena, then backed out of it. A jury awarded the movie’s producers with $8 million in damages, forcing Basinger to file for bankruptcy.

 

When Are Verbal Agreements Appropriate?

 

The best use cases for verbal agreements tend to be low-risk situations. These include:

 

• Small and personal transactions, such as buying a cheap second-hand item
• Informal arrangements, such as pet-sitting or babysitting
• Trusted relationships, such as between parents and their children

 

Outside of these examples, it’s usually better to put your agreement into writing. The more complex a transaction is, the more likely it is to cause legal disputes and/or misunderstandings. Even if you believe a verbal agreement would hold up in court, there’s little reason not to write up some sort of record of receipt to prove it.

 

Proving a Verbal Agreement

 

If you do decide to make a verbal agreement, there are several things you can do to protect yourself beyond writing down the terms. For instance, you can always collect secondary documents that could strengthen your cause. This includes texts, emails, or any other sort of written correspondence between you and the other party.

 

Another thing you can do is find someone you trust to witness the verbal agreement. Even better, you can make a video or audio recording of the agreement and its terms. At the end of the day, the more details you can provide about the agreement, the easier it will be to prove it existed in the first pl