Oral contract

An oral contract is a contract, the terms of which have been agreed by spoken communication. This is in contrast to a written contract, where the contract is a written document. There may be written, or other physical evidence, of an oral contract – for example where the parties write down what they have agreed – but the contract itself is not a written one.

In general, oral contracts are just as valid as written ones, but some jurisdictions either require a contract to be in writing in certain circumstances (for example where real property is being conveyed), or that a contract be evidenced in writing (although the contract itself may be oral). An example of the latter is the requirement that a contract of guarantee be evidenced in writing, which is found in the Statute of Frauds.

Similarly, the limitation period prescribed for an action may be shorter for an oral contract than it is for a written one.

The term verbal contract is sometimes used as a synonym for oral contract. However, since the term verbal could also mean just using words, not only spoken words, the term oral contract is recommended when maximum clarity is desired.


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