Myth or Fact: A verbal contract isn't binding

It’s a common belief that a contract only counts if it’s written down and signed—but is that really true? In reality, many everyday agreements are made verbally, whether in the workplace, between businesses, or in personal dealings.

This article explores the myth that verbal contracts aren’t binding, explains what actually makes a contract legally enforceable, and highlights the risks and practical considerations to be aware of when agreements aren’t put in writing.

What makes a contract legally binding?

For a contract to be legally binding, four key elements must be present:

So, does the contract need to be in writing to be legally binding?

The short answer is, no.

A contract does not generally need to be in writing to be legally enforceable. The law instead focuses on whether the key principles of a contract are present and not the form used. In practice this means a contract can be formed through face-to-face conversations, over the telephone, or even through a combination of verbal and written communication.

However, there are some important exceptions. Certain types of agreement must be in writing to be enforceable. Common examples are:

But, what are the risks of a verbal contract?

Whilst verbal contracts can be legally binding, they carry several practical risks - the most common issue is proof. In the absence of a written record, it can be difficult to prove what was agreed. Sometimes, it can even be difficult to prove that there was a contract in place in the first place.

With verbal contracts there is also a greater risk of misunderstanding. Without clearly documented terms, parties may interpret discussions differently or dispute what was actually agreed.

As a result, disputes arising from verbal agreements can also strain personal or commercial relationships, particularly where expectations were never clearly documented from the outset.

How can you prove a verbal contract exists?

Proving a verbal contract exists can be challenging but not impossible. In the absence of a written agreement the court will consider at all available evidence to determine whether a contract was formed and what its terms were.

This may include any written communications between the parties, such as texts, emails, or messages through other platforms to prove what was agreed. It can also include, witness evidence, for example, if a third party was present during those discussions. In addition, one of the most important types of evidence is the conduct of the parties. For example, if one party has acted in a way that is consistent with the existence of this agreement, such as making a payment or beginning to work, this may support the argument that a contract exists.

Ultimately, the court will consider all surrounding circumstances to determine on the balance of probabilities whether a binding agreement existed. For this reason, whilst verbal contracts are enforceable, having a contract in writing remains the most reliable way to protect your position.

If you are unsure whether a verbal contract you may have entered into is enforceable, please contact ARAG’s Legal Advice Line on 0117 934 2111 to speak with one of our team.