# Oral Contracts: Definitive Guide to Proving and Enforcing Agreements

![Oral Contract: A contract outlined and agreed to via spoken communication and not written down and signed.](https://www.investopedia.com/thmb/wG6u9TdEwI15qKEDDG9EB70uujU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/oral-contract.asp-1-FINAL-1-b8c9c690b5ec45b9a6aad240b230c70c.png)

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## What Is an Oral Contract?

An oral contract, though not documented in writing, holds legal binding power through spoken agreements. While challenging to prove, these agreements can be upheld with evidence such as witness testimonies and documented actions. Understanding the nuances and jurisdictional factors affecting oral agreements is essential for ensuring their enforceability.

### Key Takeaways

*   Oral contracts are legally binding agreements made through spoken communication without written documentation.  
    
*   Proving an oral contract in court can be challenging, often requiring supporting evidence such as witness testimony or related documentation.  
    
*   Certain types of contracts, like those involving real estate, must be in writing to be enforceable in some jurisdictions.  
    
*   While simple oral agreements can suffice for uncomplicated deals, complex contracts should be documented in writing to prevent disputes.  
    
*   The enforceability of an oral contract can depend significantly on the jurisdiction and the nature of the agreement.

## How Oral Contracts Work and Their Legal Implications

Oral contracts are generally as valid as written ones, depending on the jurisdiction and contract type. In some jurisdictions, some types of contracts must be written to be considered legally binding. For example, a contract involving the [conveyance](https://www.investopedia.com/terms/c/conveyance.asp) of real estate must be written to be legally binding.

An oral contract can sometimes be binding if backed by written evidence. Once agreed, the parties should write down the terms of the oral contract. Other evidence that can be used to bolster the enforceability of an oral contract includes the testimony of witnesses to the creation of the contract.

If either party acts on the contract, it can serve as evidence that a contract existed.  Letters, memos, bills, receipts, emails, and faxes can support an oral contract's enforceability.

Kim Basinger's 1990s case, when she withdrew from starring in "Boxing Helena," highlights oral contract enforceability. A jury awarded the producers $8 million in [damages](https://www.investopedia.com/terms/c/compensatory-damages.asp). Basinger appealed the decision and later settled for a lower amount, but not before having to file [bankruptcy](https://www.investopedia.com/terms/b/bankruptcy.asp).

## Challenges and Risks of Oral Contracts

Oral contracts are best used for simple agreements. For example, an oral contract to trade a used lawn mower for a used clothes dryer need not require much detail. The simpler the contract, the lower the chances that the parties involved will need to go to court.

Complex contracts, like employment agreements, should usually be written. Complex oral contracts are more likely to fall apart when held up to the scrutiny of a court, usually because the parties can’t reach an accord over the finer points of the agreement.

## Is an Oral Contract Enforceable?

Generally, yes, an oral contract is enforceable even though it may be difficult to prove. The enforceability of oral contracts also comes down to the jurisdiction in which a contract may be contested and the type of agreement the contract relates to.

## What Makes a Valid Oral Contract?

A valid oral contract consists of an offer, usually a price or a promise for some action to be taken, and an acceptance; an agreement accepting the offer in exchange for payment or service. There need not be more information involved in an oral contract than just the offer and the acceptance of that offer.

## What Are the Disadvantages of Oral Contracts?

The primary disadvantages of oral contracts are that they are difficult to enforce, may lead to confusion and error, or the outcome may be inconsistent with what was agreed upon. Because oral contracts are made through spoken word, they can be difficult to enforce in a court of law if one party backs out or does not complete their end of the deal in an acceptable fashion. The disadvantage of all oral contracts is the increased level of risk in the contract.

## Final Thoughts on Enforcing Oral Contracts

Oral contracts hold legal weight, but proving them in court presents challenges. Their enforceability often hinges on jurisdiction and contract type, with written documentation being advisable for clarity. While simple oral agreements might suffice, complex deals should always be documented in writing to minimize risk and ensure mutual understanding.

> **Article Sources**
>
> 1.  Variety. "[Basinger 'Boxing' Suit Settled](https://variety.com/1995/film/features/basinger-boxing-suit-settled-99123537/)."