Whether you agreed to a customer contract quickly or did not have time to formally document the terms, your business may have entered into a verbal agreement without realising.
Misunderstandings about what was agreed can quickly escalate and disputes can often arise when no written agreement is in place.
Although it is more challenging to untangle disagreements involving verbal contracts, you do still have the right to dispute them.
Our Manager of Dispute Resolution, Luke Morgan, investigates.
Are verbal agreements legally binding?
Verbal agreements are legally binding in the UK, provided they meet certain elements of a contract.
This includes:
- An offer being made by one party
- Acceptance of that offer by the other party
- Consideration, meaning an exchange of value under the contract
- Intention by both parties to create a legally binding agreement
If these conditions are met, a verbal agreement can be enforced just like a written contract.
Courts have increasingly upheld informal agreements, such as emails, text messages, WhatsApp or Snapchat messages, as evidence of legally binding contracts when the essential terms are clear.
This was proven in the Jaevee Homes Ltd v Fincham case, where WhatsApp messages were found to be evidence of a legally binding agreement.
Verbal contracts may fail to address warranties, delivery obligations, late payment penalties or termination clauses.
These omissions can often lead to disputes that require careful management and professional guidance to resolve.
How can you resolve a verbal agreement dispute?
When a dispute arises, your first step is usually to negotiate directly with the other party.
Open discussion may allow both sides to reach a mutually acceptable solution and preserve the business relationship.
This negotiation will also present you with an opportunity to formalise the agreement in writing and help prevent future misunderstandings.
If negotiation is unsuccessful, Alternative Dispute Resolution (ADR) can be pursued.
ADR involves mediation, where an independent third party helps the parties work toward an agreement and arbitration, where the third party adjudicates and makes a binding decision.
When negotiations or ADR are insufficient, the final option is to issue a claim in court for breach of contract.
Evidence is crucial in these situations to prove or refute the terms of the verbal agreement.
Courts, mediators and arbitrators will consider emails, letters, invoices, witness statements and other documentation when reviewing the claim.
How can we support your verbal agreement dispute?
Verbal contract disputes can be difficult, but our expert team can help assess the terms of your agreement and gather the necessary evidence to support your claim.
We can support you during negotiations or court proceedings and help you achieve a fair outcome that protects your interests.
To learn more about how we support you during a dispute, contact our team today.
