Legal Definitions - verbal contract

A verbal contract is an agreement between two or more parties that is formed entirely through spoken words, rather than being written down. Although the term "verbal" technically refers to anything expressed in words (whether spoken or written), in legal contexts and common understanding, a "verbal contract" is synonymous with an oral contract.

For a verbal contract to be legally binding, it must generally contain the same essential elements as a written contract: a clear offer, an unequivocal acceptance of that offer, and consideration (something of value exchanged between the parties). The main challenge with verbal contracts often lies in proving their existence and specific terms, as there is no written record to refer to if a dispute arises.

• Example 1: Service Agreement

  A homeowner calls a local handyman and says, "Can you fix the leaky faucet in my kitchen next Tuesday for $150?" The handyman replies, "Yes, I can be there Tuesday morning and that price works for me."

  This illustrates a verbal contract because the homeowner made an oral offer for a specific service at a set price and time, and the handyman orally accepted these terms. Both parties communicated their agreement and the exchange of service for payment entirely through spoken words.

• Example 2: Purchase of Goods

  At a farmer's market, a customer asks a vendor, "How much for a bushel of those apples?" The vendor states, "They're $25." The customer then says, "I'll take them," and hands over the money.

  This is a verbal contract for the sale of goods. The vendor made an oral offer (the price for the apples), and the customer orally accepted the offer and provided the consideration (payment). The entire transaction, including the agreement on price and quantity, was conducted through spoken communication.

• Example 3: Informal Loan

  A college student says to a friend, "I'm short on rent this month; could I borrow $300 until I get paid next Friday, and I'll pay you back then?" The friend responds, "Sure, I can lend you that. Here's the money."

  This demonstrates a verbal contract for a loan. The student made an oral offer to borrow a specific amount of money with a promise to repay it by a certain date, and the friend orally accepted by providing the funds. The terms of the loan were established and agreed upon through their conversation.