Author: Paridhi Agrawal, 2nd Year law student of Amity University, Noida.
Scope of the Blog
Most of the theorists studying contract law agrees that contractual obligation is based on a principle i.e., promise, fulfilment of promises is the main aim of the contract law. In Today’s India where approximately 62% population is in the working age group, fulfilment of contracts between two people or enterprises becomes essential for the security and benefit of both the parties due to this, contract law has a major role and is extremely important to maintain the authenticity of contracts in such a manner that it provides punishments to the parties who breaches contracts and give compensations to the suffering parties. In this blog, we will discuss what are verbal commitments and do they have authenticity sufficient enough to be enforced by the law.
Verbal agreements, alternatively, consists of words, gestures, symbols by which one contractual party conveys a promise or combination of promises to another, which, on acceptance by the other contractual party turns into a legally binding oral arrangement. They can both be express or implied in nature. valid verbal agreements are legally enforceable inside the court of law, however, it isn’t of considerable evidentiary value because the settlement is made through the use of mouth and acquired after knowing 2nd hand knowledge so if In case a dispute arises it is a hard task for the court to examine the genuine nature of terms of the agreements and the facts of the case.
Hence, it can be concluded that verbal agreements are contracts despite the fact that they have been no longer memorialized in a writing. Assuming that the settlement is valid, the verbal settlement between two events is binding by law.
The key factors of making an agreement valid
All contracts, whether written, verbal, explicit or implied ought to have certain factors to be able to consider them valid.
1) offer and acceptance : There need to be a offer and acceptance which implies that one party need to propose an arrangement and the other should accept it . for example , A proposes B to get a piece of furniture worth of Rs. 200 and B accepts it than this will be considered as an agreement between the two .
2)consideration : Consideration means that both parties should give up something in order to fulfill the terms of the contract and come to a settlement for example in the above situation provided A gives furniture for money so for A consideration is furniture whereas for B money [ Rs. 200] is the consideration for getting the furniture therefore, it can be said that consideration means both contracting parties must deliver something up in trade for the settlement. This need to be some thing which is of actual cost and the parties shall know the terms of the contract and both contracting parties should accept it willingly .
3) No Valid Defense : For the enforcement of an verbal agreement by the court there shall be no valid defense to its enforcement like the parties should be sane and of sound mind while the making of the agreement , both the parties to the contract should be adult i.e. above 18 years of age , the agreement should have been made with free consent between both the contracting parties for a lawful object Case laws relating to validity of an verbal agreement.
An oral agreement is as equally legitimate, as a written one. The legality, of an oral settlement, cannot be wondered, if it falls under the ambit of the requirements stated in section 10 of the Indian contract Act, 1872.
This was held by the Delhi high court in the case of Nanak developers and traders Pvt. Ltd. vs. Vinod Kumar Alag AIR 1991, the court in the above case held that even an verbal agreement can be a legitimate and enforceable contract. therefore, in the strict sense, it is not important that an agreement must be in writing, until the law specifies it to be or the parties themselves decide to write down the terms of the agreement.
The same decision was also held by the Hon’ble Supreme Court in Alka Bose vs. Parmatma Devi & Ors [CIVIL appeal NO(s). whereby the court held that even a sale agreement can be verbal and have the same binding value and enforceability, as an written agreement , the only requirement is that it should be made according to the essentials enlisted in section 10 of Indian contract law
Admissibility of Oral Agreement as Evidence
As consistent with the Act of 1872, a valid oral agreement is of significance and may be enforced in the court of law, however, it is usually difficult to show the existence or the precise terms of the agreement in case of dispute.
moreover, section 48 of the Registration Act, 1908, states that each non-testamentary files duly registered beneath this Act, and regarding to any assets, whether movable or immovable, shall take effect against any agreement, order or declaration regarding such belongings, unless where the agreement or declaration has been observed or accompanied by means of delivery of ownership.
section 92 of the Indian evidence Act states that once the terms of any such contract or other disposition of property, or any matter required to be made in the form of a document have been proved under section 91 of the act then no evidence of the verbal agreement should be admitted . however, its proviso (2) makes an exception, that if there’s any separate oral agreement as to any matter where the document is silent and the terms are inconsistent, then the oral agreement can be proved legitimate. And proviso (3) of the same section further makes an exception that if there’s any separate oral agreement which constitutes a condition precedent to the attaching of any obligation below one of these settlement, then additionally oral agreement may be proved.
In the case of S.V. Narayana Swamy vs. Savithramma 2013, the High Court of Karnataka, the Appellant sought to prove the validity of an oral agreement , which was forcefully claimed to exist, with respect to the sale of asset . With the onus to prove on the Appellant, it did so, by producing cheque of various amounts. The court in this case upheld the existence of an verbal agreement, based totally at the scrutiny of the evidence which are provided.
hence, verbal agreements can be proved in a court of law due to several circumstantial evidence despite numerous witnesses to show the validity of an agreement, the court often takes the task to prove and verify the terms and conditions of an verbal agreements.
Proving a verbal contract
Verbal contract may seem very simple and uncomplicated but for its legal implication evidences must be presented in front of code, there are three core types of evidences.
- Sourcing of evidence: one of the best methods to illustrate the terms of the verbal agreement is via identifying witnesses to any conversations you had and receiving a written statement from them.
- Collecting Documentation: While one may not have a written contract, it’s completely possible to have other written documentation that showcases the terms of the contract and that it was entered into willingly.These kind of messages can include the emails or text massages which are related to the agreement , notes that were made at the time of settlement , financial statements etc.
- Considering actions : The other common form of proof that can be used is the actions of the breaching party for instance, the payments made by them earlier can demonstrate that the party was entered into a verbal contract .
Another evidence that the applaent can give is that if he has tried various times to contact the breaching party but the party did no responded to it .
Resolving Verbal contract Disputes
A verbal agreement will actually keep up in court when you have the desired evidence, to show that the agreement existed in the first place . however but , before you begin making ready to your day in court, you need to take all affordable steps to solve the dispute outside of court . this is important for more than one reasons. first of all, courts want to look an attempt to clear up disagreements without them. Secondly, an alternative dispute decision (ADR), together with mediation, is commonly far more price-effective than litigation. therefore, before you ask whether or not your verbal settlement will hold up in court, ask yourself whether or not you could settle the dispute through alternative method.
India is considered as a young country as almost 65% of its population is in the working age group. With young minds trying to create their identity in this harsh world it is important to make them accountable for their choices, words and expressions not only for the safety and benefits but also of others. In today’s time the use of technology has increased tremendously and almost all the business decisions , conferences etc. are made through phones , mails or messages therefore it becomes extremely important to hold people accountable for their decisions and words , they can’t be allowed to back off from their words as their backing off can lead to someone else facing adverse repercussions due to this reason Verbal agreements holds as much authenticity in legal realm as any written agreement , the only difficulty that arises In enforcing them is proving their existence and their terms and conditions however, if sufficient reliable evidences are present then they can be legally enforced and can legally bind the breaching party for the fulfilment of their end of contract or can result in giving compensations for the appellants loss too. Thus, verbal or oral agreements can legally bind the contracting parties to fulfil the terms and conditions of the agreement.