Are Verbal Contracts Binding? What Needs to Be Included in the Contract?

Contracts are legally binding agreements between parties. Generally, contracts should include an offer, acceptance, and intention in order to be binding. Companies enter into contracts with others on a daily basis. These contracts can become cumbersome, though they are necessary. Sometimes, however, people do business verbally. This can leave people wondering, are verbal contracts binding?

Verbal Contracts

Verbal contracts are typically fine, until a disagreement occurs. When one party disputes the terms or other aspects of the contract, the problem can be difficult to resolve. While verbal contracts are used quite often for minor agreements, they can be problematic; especially when there is a large sum of money involved. The problem with verbal contracts is that they are open to too much interpretation by the parties. One person may hear one thing, and the other may hear another. Without a written agreement, parties may not be aware that they do not fully understand the contract. Further, some contracts are not enforceable unless they are in writing. A.R.S.44-161

Protect Yourself

If you have entered into a verbal contract, there are some things you can do to try to protect yourself. The most important thing to do is to follow up the conversation with an email. This serves as an acknowledgement of the discussion and could help to prove that a contract existed, if the need arises. Emails will also establish the terms that were agreed upon by both parties. If there is no understanding between parties, a contract likely does not exist.

Written Contracts

Written contracts are much more preferable over verbal agreements. Written contracts allow parties to review and understand the terms before they agree to them. This is an important part of the enforcement of a contract. Although written contracts are better than oral ones, there may still be disagreements between parties. For this reason, it is a good idea to have the contract drafted or reviewed by a lawyer before you execute it. This will prevent some issues from becoming disputes.

Resolving Contract Disputes

Contract disputes can escalate when parties cannot come to an agreement. Some disputes may lead to legal litigation with the filing of a lawsuit. It is best to try to resolve the problems before they become unmanageable. When involved in a contract dispute, you may need help from a reputable commercial law attorney. Your attorney will work with you to gather the documents and information necessary to resolve your case. Whether you need to create a contract or sign one that has been presented to you, you can count on the experienced lawyers at Udall Shumway PLC to provide the assistance you need.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Are Verbal Contracts Binding, or any other litigation issues, please feel free to contact us at 480.461.5300, log on to,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.