Many people wax nostalgic for days past when a handshake was as good as a signature on the bottom of a contract; however, what they may not realize is that the rules from “days past” may indeed still be applicable in the modern age. In certain instances, a verbal contract may be just as enforceable as a paper contract. According to Forbes Magazine, a verbal contract is indeed enforceable, but it carries with it a significant risk of “he said, she said” in the aftermath.
There are some instances where a verbal contract will not be legally binding. For instance, sale and transfer of land, contacts involving a promise of paying somebody else’s debt, selling goods that are worth more than $500, or if the terms of the contact will take longer than a year to fulfill, a verbal agreement will not suffice and the parties are required to create a written agreement.
Otherwise, verbal agreements can indeed be considered binding so long as their purpose is lawful, involves the free consent of everybody involved, there was a clear offer and a clear acceptance of terms, and everybody has the legal capacity to creating and entering contracts.
Of course, this means that there is a lot of room for debate where a verbal agreement is concerned. This is why it is generally advised for persons to wish to be involved in a contract to create a written agreement. Often this can be as simple as an email exchange where all parties agree to the terms lain out. Otherwise, it can be very difficult for either party to prove what was agreed to or what was not.