2. A binding agreement is reached when a sensible person believes, on the basis of the words and behaviour of the parties, that he or she intends to enter into a contract. In most cases, the question is whether an offer from one party (of the supplier) was subject to certain conditions and to accept this offer without restriction, notified by the other party to the supplier. But in general, an oral agreement can be as applicable as a written agreement, as long as there is an offer and acceptance of an offer for which the money is exchanged. Disputes over handshake/verbal agreements will generally occur because a party wishes to make its share. In their decision, the courts will focus on the details of the terms of the agreement to determine what the parties have agreed to. As the terms will be verbal, the most difficult situation will occur, in which it will boil down to the word of one party against the other. To do so, the court can conclude that each party`s request is credible on the terms and actions taken by each party since the agreement, and concludes what the conditions of their analysis were. When the offer expires, it will cease to be an offer.
If the oral agreement does not contain a specific discussion about the duration of the offer, the offer expires at an “appropriate” time for this type of product or service. Although at first glance oral agreements are effective and can be applied as valid and legally binding treaties, there is a downside. However, oral contracts are very difficult to enforce, especially in case of confusion about certain conditions or in case of litigation. If certain terms are not written, are not too general, or come from promises made long ago that neither party remembers it correctly, it becomes the word of one person against another, and considerable effort can be made to find out what the terms of the agreement were. The first essential elements of a binding written or oral agreement are an “offer and acceptance.” This element is relatively simple. It shows the supplier`s willingness to be tied to the offer if accepted by the bidder. For example, John offered to sell his yacht to Jim, and Jim agreed to buy it – it`s a beautiful boat! John later decides that he doesn`t want to sell the yacht – to Jim`s frustration when he started making arrangements to buy it. Jim wants to force John to sell the yacht on the basis of his initial agreement. However, the court would not recognize the agreement as a legally binding contract, as not all terms of sale, such as the purchase price, and other essential elements have been agreed upon. Can an oral promise from a good friend be a binding contract? Another problem with oral agreements is that some people are placed on the ground in their discussions and can enter into agreements without much thought into the details and consequences of the transaction. As a general rule, a written agreement gives each party the opportunity to read the terms of the agreement before the signing and conclusion of this agreement.
For this reason and the reasons mentioned above, we always recommend a written agreement as opposed to an oral agreement.