Oral Contract

In one sentence

A binding agreement made by spoken words only, with no written documentation.

Plain English

An oral contract is a deal made entirely by talking—no papers, no signatures, just words. While oral contracts can be legally binding, they're much harder to prove in court because there's no written evidence of what was actually agreed to. Many types of contracts must be in writing to be enforceable, so an oral agreement for those situations won't hold up in court. Even when oral contracts are allowed, disputes about what was said often lead to "he said, she said" arguments.

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Example

Your neighbor agrees over the fence to pay you $500 to paint his house, and you shake on it. That's an oral contract. If he refuses to pay after you finish, you'll have a hard time proving the deal in court without witnesses or written confirmation.

Used in a sentence

“The oral contract to sell the business was unenforceable because it should have been documented in writing.”

Related terms

Written Contract

An agreement between parties that is documented in writing and signed by the parties involved.

Formal Contract

A contract that requires specific formalities, such as a seal, notarization, or written form, to be enforceable.

Contract

A legally binding agreement between two or more parties to do or not do something.

Evidence

Information, documents, or physical items presented in court to prove or disprove facts.

Material Fact

A fact that significantly affects a party's rights, obligations, or decision-making in a contract.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Consideration

Something of value exchanged by each party to make a contract binding.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.