Elements of an enforceable contract
In order for a contract to be enforceable the following essential elements must be present:
- Agreement (Offer & Acceptance);
- Contractual Intention; and
- Legal Capacity.
Generally, there are no requirements as to the form of a contract in order for the contract to be enforceable. As a result, a contract may be written or oral. This works as long as the above elements are satisfied at the time of formation. However, in accordance with specific modern legislative requirements, contracts such as those for the sale of land, must be in written form. Failure to comply with these formal requirements often result in non-enforce ability of the agreement.
What is necessary for a valid agreement?
Traditionally, in order to establish an agreement there must be a clearly identified offer made by one party, and an acceptance of that offer made by the other party. For an offer to be effective it must demonstrate a clear willingness to be bond to the promise without further negotiation, whilst proposing a direct exchange of commitment. Acceptance of the offer must usually also be communicated to the other party in order to be effective. Further, the accepting party must also correspond with all proposed terms of the offer. This applies for both written and oral contracts.
How can I prove my oral agreement is enforceable?
In order to establish the existence of an oral contract you must prove that there was a legal relationship between yourself and the other party. Whilst this may be difficult to prove, providing both oral and written evidence will assist in proving the existence of the oral contract.
- Oral evidence from others who support your testimony may assist you in proving an enforceable contract
- Witnesses to the agreement may be able to provide evidence which is usually set out in an affidavit.
An Affidavit is a written statement by a person that is affirmed and used for evidence in court.
- Correspondence between you and the other party via email or letter may assist in proving the existence of a binding agreement
- This correspondence can be in the form of an email, letter or even text messages.
- Documents including invoices, receipts, bank statements or purchase orders indicating an exchange of money between both parties is also useful in proving an oral contract.
So, can oral contracts be binding?
Therefore, in order for an oral contract to be enforceable the traditional elements of a contract must be established. In order to distinguish between an enforceable and unenforceable oral contract, the courts must assess the offeror’s intention behind the relevant statement. Further, they need to assess whether a reasonable person would interpret the language as a binding offer. We strongly suggest that where an agreement is important it is done in writing.
NEED LEGAL ADVICE?
For more information and legal advice concerning oral contracts, contact our experienced solicitors.