Mutual Verbal Agreement: What it Means and Why it Matters
A mutual verbal agreement, also known as an oral agreement, is a contract between two parties that is made verbally, without any written documentation. While such agreements are legally binding in many cases, they can be challenging to enforce as there is no physical evidence of the terms and conditions agreed upon.
Mutual verbal agreements can cover a wide range of matters, including employment terms, sales contracts, service agreements, and rental agreements. These types of contracts often arise when the parties involved want to move quickly and do not wish to involve lawyers or draft formal legal agreements.
However, while a mutual verbal agreement may seem like an efficient way to strike a deal, it can also come with risks and uncertainties. Firstly, oral agreements can be misinterpreted or forgotten, leading to confusion and disputes down the line. For instance, if a buyer and seller agree on the sale of a car but fail to agree on the delivery date or price, either party may have a different interpretation of the terms.
Additionally, a mutual verbal agreement may be difficult to prove in court, especially if the parties involved do not have supporting documentation or witnesses. This means that if a dispute arises, it may be challenging to establish the terms of the agreement or who said what.
To decrease the chance of disputes and misunderstandings when entering into a mutual verbal agreement, it is essential to ensure that both parties have a clear understanding of the terms and conditions of the contract. This can be achieved by outlining the terms in writing and having both parties sign the document.
Furthermore, it is crucial to review and confirm the understanding of the agreement periodically, especially if the agreement involves extended time frames. This way, if any issues arise, they can be addressed promptly to avoid larger problems in the future.
In conclusion, while a mutual verbal agreement can be an efficient way to strike a deal, it comes with risks and uncertainties that should be considered carefully. To mitigate these risks, parties should ensure that they have a clear understanding of the terms and conditions, review the agreement periodically, and ideally seek legal advice to ensure the agreement is enforceable. By taking these steps, both parties can feel confident that they have entered into a mutual verbal agreement that will stand up in court if needed.