Verbalized Agreement: What it is and Why it Matters?
When we think of an agreement, we usually picture a written contract that clearly outlines the terms and conditions between two parties. While written contracts play a crucial role in formalizing agreements, verbalized agreements are equally important in business dealings, especially in situations where a written contract is not possible or necessary.
A verbalized agreement, also known as an oral agreement or a handshake agreement, is an agreement made between two parties verbally, without any written documentation. It is a non-formal way of agreeing on something, usually based on trust and mutual understanding between the parties involved.
Verbalized agreements are commonly used in everyday life, from agreeing to meet a friend at a certain time to accepting a job offer on the phone. In business, verbalized agreements are often used in situations where a written contract is not immediately necessary, such as discussing the terms of a potential partnership or agreeing on a project timeline.
While verbalized agreements may seem less formal than written contracts, it is crucial to take them seriously and approach them with the same level of care and consideration. Verbalized agreements can carry the same legal weight as written contracts in certain situations, especially when they meet specific criteria.
For a verbalized agreement to be legally binding, it must meet the following requirements:
1. Offer and Acceptance – Both parties must clearly agree to the terms of the agreement, and one party must make an offer that the other party accepts.
2. Intent – Both parties must have a clear intention to be bound by the agreement.
3. Consideration – There must be some form of benefit or exchange, referred to as „consideration,” between the parties involved.
4. Capacity – Both parties must be legally able to enter into the agreement, which means they must be of legal age, sound mind, and not under duress or influence.
5. Clarity – The terms of the agreement must be clear and unambiguous.
If these requirements are met, a verbalized agreement can be just as legally binding as a written contract. However, it is essential to note that verbalized agreements can be challenging to prove in court, as there is no written documentation to refer to. In situations where disputes arise, it is always best to have written documentation to support the agreement.
In conclusion, verbalized agreements can be a valuable tool in business dealings when used correctly. They can help establish trust and foster positive relationships between parties. However, it is crucial to approach them with care and take the time to ensure that all parties involved clearly understand and agree to the terms. Always remember that a verbalized agreement can carry the same legal weight as a written contract under certain circumstances, so it is vital to take them seriously and give them the attention they deserve.