The concept of a contract is usually associated with something that is written down, signed and witnessed. It follows that when one talks of a breach of contract, one is referring to a formal, written legal document. But the fact is verbal agreements can also be considered legally binding and enforceable under specific circumstances, so a breach of contract can also apply to oral or verbal contracts.
Oral Contracts Defined
You may not realize it, but every time you make an arrangement with someone for the purchase, trade or repair of something, you are entering into an oral contract. There are a few elements that constitute a contract, and they apply to both oral and written contracts. These are:
- the offer
- acceptance of the offer
- a common understanding (“a meeting of the minds”)
- consent to of the terms of the contract by both parties
- execution and delivery
When all these elements are present, the contract is considered binding. The difference between oral and written agreements is when it comes to a breach of contract. In most cases, oral contracts are entered into when the terms of the agreement is simple, easy to remember and short-term.
An example would be an agreement between two friends going on a trip to split the expenses where one pays for transport costs while the other pays for all other expenses. It is the responsibility of both parties to have the means to fulfill their part of the agreement. When one party forgets to withdraw money, forcing the other party to pay for everything, it could be construed as a breach of contract.
In most cases, however, there are no real consequences to breaching an oral agreement unless it results in injury, loss of income or damages to another person. A breach of contract lawyer would know if the oral contract is enforceable, and provide advice on whether to pursue litigation.