If two or more parties reach an agreement without written documents, they will enter into an oral agreement (formally known as an oral contract). However, the authority of these oral agreements can be a bit of a grey area for those who do not know the law of contracts. An oral contract is a verbal agreement between the parties, sometimes legally binding. The lack of hard evidence is a problem with proof of an oral contract. If an oral contract does not interfere with one or more elements of a valid contract, it is likely that a court will declare the agreement inconclusive and unenforceable. Many states have written provisions for certain treaties that believe that oral agreements are insufficient. For a treaty to be legally binding, these five elements must be at stake: the purpose of the contract must be legal. In our example, the nephew`s reason is to borrow money from his aunt to replace a flat tire on his car. As such, the contract between them is legal. However, if the nephew wanted to lend money to illegally modify his car (z.B.

installing lights to mimic a police car), the purpose becomes illegal and the contract is invalid. Contracts are essential for commercial and commercial relations. Whether in writing or orally, legally binding contracts contain five basic elements. Lawyers at the law firm Bassett are willing to cooperate with you and your company to ensure that your contracts contain these elements, defend your interests in the event of an infringement, or to help you determine whether a contract you are being maintained contains these essential elements. Just like the aunt in our imaginary scenario, you`re probably better off documenting a written agreement. Something as simple as a promised note, detailing the nephew`s promise to repay his aunt, could have avoided any quarrel over their agreement. Finally, it is less difficult to ask family members for a written loan than to bring them to justice. Understand – Parties must understand that this is a binding contract A breach of the oral contract may occur if there is an agreement between two parties, but if a party does not comply with the agreed terms.3 min Read be sure to review your state`s laws or fraud law if you are not sure whether or not a written agreement is owed. According to the sources, there may be between four and six elements that make a treaty legally binding.

Some sources consolidate elements under the same title. The six possible elements are: for an oral agreement to be binding, the elements of a valid contract must be present. To illustrate how the elements of a contract create binding conditions in an oral agreement, we use the example of a man who borrows $200 from his aunt to replace a flat tire. Contractual terms must not be presented in a vague, incomplete or erroneous manner. In other words, there should be an agreement on who the contracting parties are, on each party`s obligations, on the price to be paid and on the purpose of the contract. The conditions between aunt and nephew are very clear; the aunt lends $200 to the nephew for the purchase of a new tire (and nothing else) provided he reseals her 200 dollars at some point (for example. B when he receives his next cheque).