An oral contract, also known as a verbal agreement, is a legally binding exchange of promises between two parties, verbalised and agreed upon without being written down. Though less common than a contract in written form, an oral contract is considered equally valid and enforceable in a court of law.

Oral contracts can be used for a variety of situations, ranging from employment agreements to the sale of goods and services. By going into detail about the verbal agreement and explaining the expectations of each of the parties involved, it helps to ensure that both sides understand the implications and can prove obligations if needed.

When it comes to creating an enforceable oral contract, the same basic rules apply as with a written contract. Both parties must reach a consensus, explain the issue in detail, and formally an agreement. All parties must be of sound mind when the oral contract is entered, meaning that they are capable of understanding the terms and conditions outlined.

The parties to an oral contract must also have a legitimate contractual capacity. This means that individuals must be at least 18 years of age and be free of any mental or physical impairment that is likely to substantially affect the party. As a result, if either of the parties is a minor, they cannot enter into a legal contract.

Upon understanding the terms of an oral contract, the parties must demonstrate mutual assent, whereby both parties agree that they are indeed making an offer and promise to enter into an agreement. Both parties must also have the intention to make the commitment legally binding.

In order for an oral contract to be legally enforceable, it must also be supported by consideration. In other words, there must be something of value that is given between the two parties, and there must be an exchange of promises. The most common form of consideration is money, but services may also be used in some cases.

The main advantage of an oral contract is that it can be much simpler and less time consuming to create than a written contract. However, it can often be difficult to prove that the contract does exist, or what the exact terms are that the parties agreed to. Someone who feels his or her rights have been violated can file a claim with the court to prove that a valid contract was entered.

When attempting to prove the existence of an oral contract, both parties must provide sufficient evidence that the contract does indeed exist. This can include emails and other forms of correspondence, as well as notes, recordings, or other documents that indicate that an agreement was made. It is important to keep any evidence related to oral contracts in a secure location, as it could be used to prove that the contract exists in the event of a dispute.

Though oral contracts are considered legal and enforceable, it is important to emphasise that they can be difficult to prove in a court of law. Written contracts are often seen as more reliable and enforceable. Therefore, it is generally recommended that parties entering into an agreement draft a document that outlines all the terms of their agreement and both parties should sign it in writing.