For example, employers, employees, and independent contractors may find it invaluable to document the terms of their agreements in an employment contract or service contract. While an oral agreement can be legally enforceable, it can be difficult to prove it in court. When two or more parties reach an agreement without written documentation, they create an oral agreement (officially called an oral contract). However, the authority of these oral agreements may be a grey area for those unfamiliar with contract law. Just like the aunt in our imaginary scenario, you`d probably be better off documenting an agreement in writing. Something as simple as a promissory note detailing the nephew`s promise to reimburse his aunt could have prevented any dispute over their agreement. After all, it`s less tedious to ask family members for a written loan agreement than to sue them. Without a witness to the deal, the aunt could spend $200 — and a decent relationship with her nephew. Be sure to check your state`s laws or fraud law if you`re not sure whether you need a written agreement or not. Many oral contracts are legally binding, but the possibility that a party will not fulfil its obligation still exists; For this reason, people often prefer to receive their agreements in writing. To win the case, the aunt must prove with proof that her nephew borrowed the money with the intention of repaying it, while the nephew must prove that he did not accept such a thing.

Without documentation of the agreement, it becomes a matter of he-said-she-said. Ultimately, a judge decides which case the party is most likely to have. The terms of the contract must not be vague, incomplete or distorted. In other words, there should be an agreement on who the parties are, what obligations each party has, what price to pay and what is the purpose of the contract. The conditions between aunt and nephew are very clear; The aunt lends the nephew $200 for the purchase of a new tire (and nothing else) on the condition that he will repay the $200 at some point (e.g., .B. when he receives his next paycheque). The parties, both sensible, should freely accept the terms of the agreement, i.e. without undue influence, coercion, coercion or misrepresentation of the facts.

Both the nephew and aunt accept the terms of the contract without putting pressure on themselves and with the intention of fulfilling their obligations. If an oral contract fails one or more elements of a valid contract, a court may declare the agreement null and void and unenforceable. Many States have provisions for certain treaties that must be in writing, which is considered inadequate oral agreements. For an oral agreement to be binding, the elements of a valid contract must be present. To illustrate how the elements of a contract create binding terms in an oral agreement, we take the example of a man borrowing $200 from his aunt to replace a flat tire. Most oral contracts are legally binding. However, there are some exceptions, depending on the construction of the agreement and the purpose of the contract. In many cases, it is best to create a written agreement to avoid disputes.

The parties must exchange something of value (monetary or otherwise) called consideration. In addition, the exchanged item must be legal. In our example, the $200 and the promise to return it are examples of a legitimate consideration. The nephew, for example, could not replace his repayment of the money with illegal drugs. The parties must be able to conclude the contract, i.e. they are of legal age and have a right mind. In our example, the nephew and aunt are both over 18 years old, are not under the influence of psychotropic substances and do not have cognitive impairments such as dementia. Depending on your source, there may be between four and six elements that make a contract legally binding. Some sources group the elements under the same title.

The six possible elements are: In a valid contract, one party makes an offer and the other party agrees. This is commonly called the “meeting of spirits” because both parties accept these conditions. In our example, the aunt offers to lend money to her nephew on the condition that he repay it within a reasonable time. The nephew accepts her offer and promises to pay her back in full after buying her new tire. Since this case would be heard by a civil court (and not by a criminal court), the burden of proof is on the weighting of probabilities and not on a reasonable doubt. The subject matter of the contract must be lawful. In our example, the reason the nephew borrows money from his aunt is to replace a flat tire on his car. As such, the contract between them has a legitimate purpose. However, if the nephew wanted to borrow money to illegally modify his car (for example.

B to have lights installed to imitate a police car), the purpose becomes illegal and the contract is invalid. Although the aunt can prove that she lent money to her nephew, with bank statements showing that she transferred $200 to her nephew on the day in question, she still has no physical evidence that he agreed to repay him. He might even deny that he made such a promise (committing my perjury in the process). These rules may vary from state to state, but in general, a written contract is necessary: once you agree to do something, people usually expect you to do it – but are you legally obligated? Let`s continue with our imaginary scenario: if the nephew, after retrieving his new tire, decides not to reimburse his aunt when he receives his next paycheck, the aunt can sue him. Read more: “Off the Record” vs. a non-disclosure agreement. .