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What Makes a Verbal Contract Legally Binding?

What Makes a Verbal Contract Legally Binding?

Johanna is a photographer who was just starting out in her business journey, and was mostly working with friends or for friends of friends. She loved each opportunity to shoot sessions, and sending off a fully edited gallery gave her a thrill. 

Until she had a client who responded that they hated their gallery and insisted on getting their money back, as they “couldn’t” use any of the photos she delivered.

“Johanna, it’s simple - just refer them to the no-refund clause in your contract!” is what you’re probably screaming in your mind. 

The problem? Johanna had a verbal contract in place - she and this client agreed on a certain payment and even talked about the fact that there were no refunds. But now Johanna has no idea what to do because she doesn’t have written proof.

When it comes to a verbal contract, in order to belegally binding, they must meet the same requirements as a written contract. One of those elements is the intention to create legal relations. When your contract is a verbal contract, the burden of proof is on you to show that there was intent to create legal relations. 

Typically, commercial agreements are seen as legally binding in the court. However, there is still the burden of proof. Because just like above, if something goes awry, it’s going to be really difficult to prove that your contract terms existed if they weren’t written down. 

Prove Your Verbal Contract is Legally Binding

If you have witnesses or documents that support the claim, you have a better chance of proving that your verbal contract existed. Without that support, it’s going to be extremely difficult to enforce your contract. 

But what if I trust the person I’m working with? 

We get it - it’s easy to feel like you don’t need a contract if you trust the person you’re working with. But often, contract disputes don’t happen simply because someone is trying to cause harm to another. 

More often than not, these contract disputes come about due to a lack of clarity. And this happens with written contracts often. Just imagine how much more a lack of clarity and miscommunication can happen with a verbal contract! 

Not to mention, that our memories are fickle things. Even if, in the moment, everyone has a clear understanding of the contract and is on the same page, it’s not uncommon for things to become muddled through our memories. 

Our memories change over time, and if we can step into the realm of psychology for a minute here - every single time you remember an event from the past, your brain changes in ways that can alter that memory. So each time you remember something, you’re not remembering the original memory, but the last time you thought about that memory.

Meaning, that each time one of you thinks about your verbal contract? You’re altering your memory a tiny bit. Eventually, you can easily find yourself wondering how in the world the two of you have such different memories on that moment, when it seemed that you were on the same page to begin with!

The Best Way to Make a Verbal Contract Legally Binding

The best thing you can do for yourself? Always, always, always WRITE your contracts. Verbal contracts are legal, but it’s much easier to protect yourself, and yourbusiness, if you have your contracts in writing. Don’t want to write your own contracts, or hire a lawyer to write a custom contract for you? Our contract templates are written by a lawyer, quick to set up, and save you a ton of money compared to getting custom contracts written. Save yourself a lot of future headaches by snagging one today!

Amanda Warfield
Amanda Warfield

Amanda Warfield is a simplicity-focused content marketing and launch strategist, author of the book Chasing Simple Marketing, and host of Chasing Simple - a podcast to help creative entrepreneurs uncomplicate their marketing and business. She traded in her classroom lesson plans for speaking and educating creative entrepreneurs on sustainably fitting content marketing into their business, without it taking over their business - so that they have time to grow their business.

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