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The Law & Verbal Agreements

By: Garry Crystal - Updated: 27 Apr 2017 | comments*Discuss
 
Verbal Agreements Legal Binding

Many people are not aware that verbal agreements are in many cases as legally binding as written contracts. Verbal contracts can be upheld by a court if someone decides to breach the agreement, although without written terms and conditions it may be difficult to prove.

Conditions of a Verbal Agreement

Under law there are two basic terms that constitute a binding agreement. The verbal agreement will be binding if there was an agreement on the services to be performed and an agreement was reached on remuneration for this service. This agreement can be reached by a verbal exchange in person, via telephone or via an email.

There are certain contracts and agreements that must be made in writing and these will include the sale of property, tenancy agreements, copyright transfer, and contracts for consumer credit. In some cases, verbal agreements will not be upheld in court, not because of the lack of a written agreement but because the terms of the verbal agreement were not clarified.

Written Agreements

For any agreement concerning an exchange of services it is a wise idea to have some form of contract or written statement. The contract or statement should include the terms and conditions of the agreement and is particularly helpful if a dispute between the parties occurs.

Complete Verbal Agreements

In order for a verbal agreement to be legally binding the agreement must have reached completeness. This means that all terms and conditions have been reached and agreed regarding services and terms of pay. Agreements will be incomplete when there are still further terms and conditions to be agreed. Agreements in principle will not usually be upheld in court and will not usually be considered complete verbal agreements.

Verbal Agreements and Disputes

If either party has decided to break a contract then the matter can be taken to the legal courts. In most cases the dispute may rest on the justification of the terms of the verbal agreement. There are a few ways that a judge will try and establish the terms of the agreement. These could include investigating what actually happened in practice. This can include the services that were actually undertaken and if any money whatsoever was paid for any services.

Enforcing a Verbal Agreement

Apart from taking the matter to court there are other ways to enforce a verbal agreement. If money is owed then the matter can be passed on to a collection agency to try to enforce the matter for you. The disgruntled party can also apply pressure themselves by sending letter, emails and making telephone calls to the person who is in breach of contract. Copies of all emails and letters should be kept in case the matter does reach the law courts.

Payment before Service

One way of avoiding this sort of dispute ever occurring may be to ask for some form of payment before supplying a service. Although the customer may not always agree to this it may be an option to consider. In some cases if a person is going to breach a contract and withhold payment then the odds are they may never have intended to pay for the service in the first place. In many cases though a customer may not like the idea of paying for a service until the job is completed for fear of non completion.

Threatening court action for breach of a verbal contract may not actually help the matter at all if one party intended not to carry through on the agreement. However the law does consider complete verbal agreements as Legally Binding and the matter can be brought to the law courts for a judge to make the final decision.

One interesting question is 'does a text message create a legally binding contract?'. Richard Brittle of Brittle Motors based in Stoke-on-Trent believes that it does. Over the coming weeks our leading in-house barrister will report on her findings which should make for interesting reading.

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Confused - Your Question:
We paid a £25000 deposit to an estate agent who subsequently went into liquidation. It transpired that our money had been removed from the client account prior to this.The outgoing MD and his PA both told me that the responsibility for our deposit had been agreed to be taken on by the new owners of the company. One of the new MDs confirmed this over the phone, stating that they had our money and would pay it back by the end of that week. On the Friday the other new MD phoned my husband to say that the other MD made a mistake and they would not give us the money.I know that they have paid back other people in our position, 3 out of the 4 people stated that an agreement had been made during the prepack negotiations, although this does not appear to be documented, I have an email from the previous PA stating that the new company had our money. The new company are not responding to my communications, the police have dropped the prosecution and we need our money back. Do I have a case of a verbal agreement from the first director when she told me they had the money and would definitely pay us back?Many thanks.

Our Response:
Why would you pay the deposit directly to the estate agent? Any deposit for a house should have been paid to your solicitor who would have transferred the money into a holding account.
ContractsAndAgreements - 28-Apr-17 @ 10:26 AM
We paid a £25000 deposit to an estate agent who subsequently went into liquidation. It transpired that our money had been removed from the client account prior to this. The outgoing MD and his PA both told me that the responsibility for our deposit had been agreed to be taken on by the new owners of the company. One of the new MDs confirmed this over the phone, stating that they had our money and would pay it back by the end of that week. On the Friday the other new MD phoned my husband to say that the other MD made a mistake and they would not give us the money. I know that they have paid back other people in our position, 3 out of the 4 people stated that an agreement had been made during the prepack negotiations, although this does not appear to be documented, I have an email from the previous PA stating that the new company had our money. The new company are not responding to my communications, the police have dropped the prosecution and we need our money back. Do I have a case of a verbal agreement from the first director when she told me they had the money and would definitely pay us back? Many thanks.
Confused - 27-Apr-17 @ 2:07 PM
My sister made a verbal commitment to me and the Funeral Director that she, my sister, had contacted her husband to make sure my mother's checking account would cover the cost of our mother's funeral (my bother in law is on my mothers' checking account) and that she or her husband will be droping the check off the next day. When the funeral home sent me the bill I instructed them to forward that to my sister; I get a phone message from my sister saying she never made such a commitment.I contacted the Funeral Director and she told me she has it in her notes that my sister commented on paying for the bill.I am the Executor on my mother's estate.....Do I have recourse in this matter?And is it worth the $14,575.Thank you
Disgusted - 14-Apr-17 @ 9:10 PM
Hi, a builder provided me a free quote for laying a new patio. On the day of quote he said he will install a new patio for £3000 that is £100 per sqm. He didn't even measure the size and said he can calculate the size in mind. The actual size is only 25sqm. He asked when do I need this done, I said April. He said he can do in April . But I never agreed with him or gave him the go ahead. He sent an email with free quote £3000 without any details of the job, what that £3000 covers. He said as agreed we can commence the work in April. I replied I had to postpone my plans and that I will get back. Now he is telling he has ordered the materials and that if I cancel I had to pay £500 cancellation fee. Is he trying to manipulate?
Sri - 11-Apr-17 @ 10:01 PM
Hi, I made a verbal agreement with my landlord for a 3 month period of time, March 11th through June 11th. I was not present when the lease was signed on March 12th by my boyfriend, but told him to make sure the lease said the 11th. The lease says it begins on March 1st, and on a month-to-month basis. My boyfriend (who has now learned a lesson), said that he verbally clarified with the landlord about the dates being the 11th and that the landlord said "yes, we already worked that out, but just for leasing purposes I had to put the 1st of the month." So he signed the lease, thinking we were all on the same page. Backstory for understanding: There is a 6 week program for students to complete in the area. My boyfriend is ahead of me and was doing his 6 weeks before me. Therefore we needed a place for two 6 week periods, so I was looking for a 3 month rental. I explained this to the landlord and that is how we came to make this deal. Well, now the landlord is saying he would have never made a deal like that because everyone else pays from the 1st of the month and all other students pay for 2 full months, regardless of the fact that the program is 6 weeks. So he wanted me to pay a full additional month, for the month of June, despite our verbal agreement. As it turns out, I will not be doing my 6 week program. I had a friend who wanted to take over my lease and pay the remaining month (May 11th to June 11th). When I brought this up to the landlord is when he started to deny any agreement was made between us. The landlord already has a student who will be doing the program and who is interested in the place and paying the full 2 months coming up (May & June). So we will get our security deposit "if we are out by the 26th," because the lease requires a 30 day notice, so he would not return our deposit if we did not work with him and left at the end of the month instead. None of this is an issue for us personally. We were planning to leave before then anyway. But what I am wondering is, is there a way for me to report that this guy made a crooked deal with me? It's not right and he shouldn't be allowed to treat people that way and try to screw people like that. I would like to report it, not to get anything out of it, but in case he tries to do this to someone else in the future, then they will have this story to back them up as well.
Rental Agreements - 11-Apr-17 @ 4:58 PM
Hi, I made a verbal agreement with my landlord for a 3 month period of time, March 11th through June 11th. I was not present when the lease was signed on March 12th by my boyfriend, but told him to make sure the lease said the 11th. The lease says it begins on March 1st, and on a month-to-month basis. My boyfriend (who has now learned a lesson), said that he verbally clarified with the landlord about the dates being the 11th and that the landlord said "yes, we already worked that out, but just for leasing purposes I had to put the 1st of the month." So he signed the lease, thinking we were all on the same page. Backstory for understanding: There is a 6 week program for students to complete in the area. My boyfriend is ahead of me and was doing his 6 weeks before me. Therefore we needed a place for two 6 week periods, so I was looking for a 3 month rental. I explained this to the landlord and that is how we came to make this deal. Well, now the landlord is saying he would have never made a deal like that because everyone else pays from the 1st of the month and all other students pay for 2 full months, regardless of the fact that the program is 6 weeks. So he wanted me to pay a full additional month, for the month of June, despite our verbal agreement. As it turns out, I will not be doing my 6 week program. I had a friend who wanted to take over my lease and pay the remaining month (May 11th to June 11th). When I brought this up to the landlord is when he started to deny any agreement was made between us. The landlord already has a student who will be doing the program and who is interested in the place and paying the full 2 months coming up (May & June). So we will get our security deposit "if we are out by the 26th," because the lease requires a 30 day notice, so he would not return our deposit if we did not work with him and left at the end of the month instead. None of this is an issue for us personally. We were planning to leave before then anyway. But what I am wondering is, is there a way for me to report that this guy made a crooked deal with me? It's not right and he shouldn't be allowed to treat people that way and try to screw people like that. I would like to report it, not to get anything out of it, but in case he tries to do this to someone else in the future, then they will have this story to back them up as well.
Rental Agreements - 11-Apr-17 @ 4:50 PM
@Tools - there's nothing you can do about this. It's just a case of learning by your mistakes.
Nat - 10-Apr-17 @ 1:48 PM
This is the story. I saw a Ad on Facebook. I post and say 1500 and she reply back and say 1800 and on the ad it was 2500. She say okay they Ar mine. I phone my cousin and ask him to fetch them for and tell her and she say I must give him her number and I do so and they both get back to with a time of 8am he must fetch the tools. Next I take a bus to jhb to met my cousin with the tools. From port shepstone 800km to jhb. At 4am she phone me and out of the blues she say the tools Ar sold for a better price. All that way without sleeping. What will I tell my girlfriend when I get home? Still in a taxi back home to port shepstone. She didn't ever ask if I have more money. Then she block me after but after I posted she under block me. Who is right or wrong, me or her?
Tools - 9-Apr-17 @ 8:36 PM
Our company agreed to utilities being supplied by a particular commercial supplier.The 'contract' was done over the phone and now there are issues that we don't believe were covered in the contract.How binding is a contract made over the phone?We have a recording of the agreement where we don't feel these issues were covered.They simply blind us with science when we point this out, How should we handle this?
mary - 6-Apr-17 @ 9:49 PM
Scott89 - Your Question:
I recently purchased a new car in February 2017 and during discussions with the dealership salesman was verbally informed that if I purchased the car that day it would be delivered from the factory before the 1st April and I would therefore avoid the UK car tax rises. Since then I've now been informed that the car will not be delivered until mid April and will therefore have to pay significantly more tax per year on the vehicle. Does this fact I was giving misleading information by the salesman constitute a verbally binding agreement and therefore rights to cancel the contract or seek any kind of compensation relating to the increase in tax I will now have to pay?

Our Response:
Much depends upon your contract agreement and whether it specifies that as a new car delivery dates can change. However, with regards to the car tax hikes if you can prove what your loses will amount to and prove that you were sold the car on the reasoning of tax rises, then you may be able to request the motor dealership takes the first year hit into consideration. However, this wouldn't justify cancelling the contract or would it justify any long term compensation, just the losses relating to the difference lost over the specific dates in question. Presumably, you are aware of the amount of car tax you would be paying in subsequent years.
ContractsAndAgreements - 6-Apr-17 @ 10:47 AM
I recently purchased a new car in February 2017 and during discussions with the dealership salesman was verbally informed that if I purchased the car that day it would be delivered from the factory before the 1st April and I would therefore avoid the UK car tax rises. Since then I've now been informed that the car will not be delivered until mid April and will therefore have to pay significantly more tax per year on the vehicle. Does this fact I was giving misleading information by the salesman constitute a verbally binding agreement and therefore rights to cancel the contract or seek any kind of compensation relating to the increase in tax I will now have to pay?
Scott89 - 5-Apr-17 @ 4:43 PM
We own a small electrical company and took on 200 flats to rewire from a larger company X for a given price per flat. The site was very badly managed by the main contractor with lots of time wasted visits. After a year I informed company X that we were not going to work on any more flats. They owe us money around £10,000,we have decided to take them to court, they have now counterclaimed for £40,000 because they had to complete the works themselves. Are they bluffing ?? Would this stand-up in court ??
Mark - 31-Mar-17 @ 8:56 PM
Rob H - Your Question:
I own a small farm/smallholding and rent out a few of our farm buildings as workshops/storage, most paying by cash, with nothing officially documented, just each individuals' payments logged in a book on whichever date. One of the "tenants" who has been here for about three years and is supposed to pay monthly, is extremely behind with their rent, currently by about £2000. As well as this, there is a lot of tension going on as he has told a lie about my daughter, which she has confronted him about. This is after a recent previous occasion when my son asked him to move some of his vehicles to which he angrily retaliated. I have decided that I do not want him as a tenant anymore, but am hesitant to ask him to leave because he owes so much back rent and I can't see us being paid. Could you tell me where I stand on this situation please? Thank you.

Our Response:
Regardless of whether there is a written tenancy agreement you can still use the section 21 procedure to attempt to evict your tenant if they haven't paid rent. By the nauture of the agreement i.e money changing hands and the fact your tenant is using the space, there is an 'agreement' in place. However, in a case where there is no specific written agreement in place, you will have to attend a hearing and explain to the judge why. If you need to claim the rent which is outstanding, the small claims court is an option if the amount is under £10,000.
ContractsAndAgreements - 29-Mar-17 @ 2:13 PM
I own a small farm/smallholding and rent out a few of our farm buildings as workshops/storage, most paying by cash, with nothing officially documented, just each individuals' payments logged in a book on whichever date. One of the "tenants" who has been here for about three years and is supposed to pay monthly, is extremely behind with their rent, currently by about £2000. As well as this, there is a lot of tension going on as he has told a lie about my daughter, which she has confronted him about. This is after a recent previous occasion when my son asked him to move some of his vehicles to which he angrily retaliated.I have decided that I do not want him as a tenant anymore, but am hesitant to ask him to leave because he owes so much back rent and I can't see us being paid . Could you tell me where I stand on this situation please? Thank you.
Rob H - 28-Mar-17 @ 8:37 PM
When I was youner my father promised me after he died all of his things that he considered his toys would belong to me. My mother and sister are tryung to take thins that are rightfully mine by this agreement. He passed away. Does that break out agreement?
Michael - 28-Mar-17 @ 2:13 AM
Jewels - Your Question:
My uncle passed away last year he had a 4 yr agreement for someone to sharefarm he's property. The tenant had my uncle leave he's longterm solicitorand use the tenant's solicitor to draw up the agreement. The agreement ended in Feb. My brother sent the tenant a letter mid way through last year stating that the tenant had until the end of October to renew the agreement. The tenant did not reply within the set time frame, The tenant went ahead and sprayed the land ready to plant. he was told he should not have done so as he had let the option lapse and my brother would not be renewing the offer afterall. Now the tenant is saying he has a right for compensation for spraying and also for loss of income from potential harvests.Does he have a right to compensation? Or can my brother now do what he wishes with the land

Our Response:
In this case, your brother would need to seek legal advice.
ContractsAndAgreements - 27-Mar-17 @ 10:49 AM
my uncle passed away last yearhe had a 4 yr agreement for someone to sharefarm he's property. The tenant had my uncle leave he's longterm solicitorand use the tenant's solicitor to draw up the agreement.The agreement ended in Feb. My brother sent the tenant a letter mid way through last year stating that the tenant had until the end of October to renew the agreement. The tenant did not reply within the set time frame, The tenant went ahead and sprayed the land ready to plant. he was told he should not have done so as he had let the option lapse and my brother would not be renewing the offer afterall. Now the tenant is saying he has a right for compensation for spraying and also for loss of income from potential harvests.Does he have a right to compensation? Or can my brother now do what he wishes with the land
Jewels - 26-Mar-17 @ 10:48 AM
shortie - Your Question:
My aunt died after a battle with dementia she had to be cared for at home as a non blood relative borrowed her money to buy her home after the death of her daughter and this was secured on the home this was to be paid back at the time of her death , but as we could not find him to ask his permission to sell her home to pay for her care I had to give up work to care for her. My aunt left me her entire estate. 10 weeks after her death this person sent me a copy of a contact my aunt had signed 15 years previous agreeing to the the whole property becoming his after she died , he promised in return that the house could be sold to pay for her elderly care if needed , my aunt had no copy of said contract so we could not act upon this , my aunt was also under the care of a psychiatric nurse at the time of signing said contract for severe depression. Has he breached this contact ? would the contract stand if my aunt did not have full capacity.He had no contact with my aunt for 8 years before she died.

Our Response:
I'm afraid you would have to seek professional legal advice regarding this, due to the complexity of the issue.
ContractsAndAgreements - 24-Mar-17 @ 12:25 PM
@megdog - has she officially pulled out of the agreement? If she hasn't, and she has paid the deposit then you will have to tell the new person that the original person still wants the room. It's a bit difficult for you - but she has the first call. OB
Ollie - 24-Mar-17 @ 12:21 PM
My aunt died after a battle with dementia she had to be cared for at home as a non blood relative borrowed her money to buy her home after the death of her daughter and this was secured on the home this was to be paid back at the time of her death , but as we could not find him to ask his permission to sell her home to pay for her care i had to give up work to care for her . My aunt left me her entire estate . 10 weeks after her death this person sent me a copy of a contact my aunt had signed 15 years previous agreeing to the the whole property becoming his after she died , he promised in return that the house could be sold to pay for her elderly care if needed , my aunt had no copy of said contract so we could not act upon this , my aunt was also under the care of a psychiatric nurse at the time of signing said contract for severe depression . Has he breached this contact ? would the contract stand if my aunt did not have full capacity.He had no contact with my aunt for 8 years before she died .
shortie - 23-Mar-17 @ 10:30 PM
I am in a contract for a property next year (my second year of uni) We started the contract as a 6 and we all signed and it was fine until a group member fell pregnant and planned to keep the baby and pull out of the agreement, the estate agent was then informed of this movement and we were waiting on her paying a fee to leave the contract. in the mean time we found a replacement for the room as that was what we were told to do. the replacement is ready and willing to pay for the deposit on the house. However, the original girl had a miscarriage and then wanted to be back in the contract with us. this caused confrontation and she then said she would find somewhere else to live, however since then she has not sorted anything and wants to come back in the contract with us. She is not contacting the estate agent and they are worried so I'm asking to find out who is entitled to the room? Thank you
megdog - 23-Mar-17 @ 9:56 PM
I wanted to post again for guidance in a verbal partnership agreement that was also has emails with plans moving forward that would imply and support that a verbal agreement has been established.The agreement was to used one parties more established website to partner in selling each other complimenting products.In order to do this, I would need to stock more inventory as well as variety in order to meet anticipated increased customer demand. I have upheld my end of the deal and ordered more inventory then I would be able to handle on my own, which he is fully aware of.Unfortunately communication has gone dead on his end. I am concerned that he is backing out leaving me in a very tough financial place. I would not be able to move the volume I have.I realize your answer can only be based on these facts but really wondering if I have any case at all if in fact he does back out?
CHIANINTHEVAPE - 22-Mar-17 @ 9:06 PM
Bernerd - Your Question:
I recently paid for my brothers share of a solicitors fee to resolve a family issue. We discussed it on the phone, and via text. I am disabled and just about survive on benefits, however I did have some savings from prior to my accident which I used to pay the fees. Would this be the type of issue I could pursue through small claims and is it likely I would win?Any advice you can give would be great, this is not the first time he has borrowed money from one of his siblings, however I don't want to end up as another sister he hasn't/won't pay back.

Our Response:
If you have the emails and texts to say the money was a loan and your brother will reimburse you, then you will have a strong case to take the matter to the small claims court using this correspondence as evidence. In the meantime, in order to pursue the matter it makes good sense to find out whether your brother has the funds to pay it back. For instance, if he has no income or way of reimbursing you, then it may be difficult for you to claw back the money even through the courts. The limit for taking a case to small claims is six years of the date of the breach of contract. Obviously, coming to an arrangement with your brother to pay it back is your first priority - only if he lets you down should you take the matter further.
ContractsAndAgreements - 22-Mar-17 @ 10:33 AM
I recently paid for my brothers share of a solicitors fee to resolve a family issue. We discussed it on the phone, and via text. I am disabled and just about survive on benefits, however I did have some savings from prior to my accident which I used to pay the fees. Would this be the type of issue I could pursue through small claims and is it likely I would win? Any advice you can give would be great, this is not the first time he has borrowed money from one of his siblings, however I don't want to end up as another sister he hasn't/won't pay back.
Bernerd - 21-Mar-17 @ 9:46 AM
Can you sue someone who made a verbal agreement to enter into a business partnership? Investments have been made and acknowledged. There are also emails that would support the agreement to move forward.The first agreement was for one party to invest in the goods and the other party to sell these products on their established website. The same party selling the goods also agreed to sign over a entirely different LLC and website and link the website to their established website. There are some supporting emails and texts implying both parties agreement to move forward. For example discussions on further ideas and marketing strategie. There was alsos also a spouse that was witness to the telephone conversation and and agreement on speaker phone. The issue is the products to be sold have been purchased.Is there any thing to be done to force the other to honor this contract or accept at least 1/2 of the financial responsibilityfor the purchased goods as well honor the agreement to sign over the llc, logo and website and link it to there site as and endorse this other llc company
Obsolete33 - 18-Mar-17 @ 3:46 PM
Can you sue someone who made a verbal agreement to enter into a business partnership? Investments have been made and acknowledged. There are also emails that would support the agreement to move forward.The first agreement was for one party to invest in the goods and the other party to sell these products on their established website. The same party selling the goods also agreed to sign over a entirely different LLC and website and link the website to their established website. There are some supporting emails and textsimplying both parties to move forward as well as a spouse that was witness to the telephone conversation. The issue is the products to be sold have been purchased.Is there anyway thing to be fine to force the other to honor this contract or aacept at leat 1/2 of the responsibilityas well as sign over the llc logo and website.
Obsolete33 - 18-Mar-17 @ 3:38 PM
Hello, I have a signed agreement of operation to run a tea bar with a local members club. The agreement runs until the end of October. After 19 weeks, they are trying to change and increase my agreed rent, and change me utilities payment from a fixed rate to a metered, this works out to be an increase of 40% on the agreed amount. What is my choices to stop this. Many thanks
Clare - 18-Mar-17 @ 6:17 AM
An elderly relative recently wanted to convalesce in a private nursing home. We made enquiries and found a suitable place. When she visited to view the home she said she would like to try it out for a week, then if all was okay she would like to stay for a month. We were there on this visit. Nothing was written down or signed between her and the home. However, after one week she did not want to stay any longer due to the poor standard of food, very uncomfortable bed and unfriendly staff. She informed staff of this decision, but did not say her reasons for not staying the full month. Since leaving she has received a letter demanding she pay for the other three weeks. At no point during hers or our dealings with the home did anyone say if she left after the first week she would be liable for the full month. This is a lot of money and has obviously upset her a lot. I am worries that they might hound her for the money or worse pass this to a debt collector. She is a fragile 87-year-old. Where does she stand? Many thanks.
Kelly - 9-Mar-17 @ 7:01 PM
Hi, my daughter and her partner had a verbal agreement with his father who lent them £5000 towards the purchase of their home. The money went down in a document in their mortgage agreement as a gift which he signed. The relationship has broken down in a really distressing way and my daughter is now technically homeless while her partner has continued to live in the home refusing to sell for a reasonable price on the grounds he has to get his fathers money back. Meanwhile my daughter who has lost many thousands of pounds too and cannot rent a property because she is still named on this mortgage is being placed in a terrible position. My question is, is the original verbal agreement enforcible considering the circumstances here?
Redsally - 7-Mar-17 @ 11:15 AM
Hi, I made a verbal agreement with a driveway company to replace my driveway. However, once I understand that the company would not carry out the works as I wanted I informed them that I was going to use another company. The original company as now I formally informed me to they will take to the small claims court for breach of contract. Does the company have fair grounds for their claim or are they just trying their luck.?
Jim - 6-Mar-17 @ 11:23 PM
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