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Problems With Oral Agreements


UK law recognises the existence of oral contracts and legally treats them with the same seriousness and recognition as written ones. However, one should think twice before entering an oral agreement, as although it might be much quicker and simpler to do so, there will be a much bigger set of potential problems to deal with should a dispute arise leading to a lawsuit for both of the parties involved.

Lack of Written Proof Over Contract Terms

One of the problems concerning witness statements could arise from a lack of written documentation of contract terms due to the agreement being purely an oral one, which would in turn create a lot of difficulty in trying to examine or present any witness’ statements in heavy detail, without other supporting documents such as texts, emails and bank statements.

This also makes the task of setting complex terms and conditions almost impossible, meaning that the agreement itself must either be basic and clear to understand in its structure, as is often the case with commonly used oral agreements over cheap social transactions, or the conversation that sets the terms to be relied on for the agreement must be recorded in detail either through an online platform if it is being held there, or by other means if it is held under different circumstances. However, that only beckons the question as to why a written contract can’t simply be used instead if such extensive steps are taken to properly evidence an oral agreement.

Lack of Certainty Over Intricate Details

The same problem that plagues the need of proof for terms can also be encountered when it is time to draft a particular of claims form. Due to CPR 16 PD 7.4 the particular of claims for the oral agreement must set out the contractual words used and state by whom, to whom, when and where they were spoken. If the agreement was made several years prior to the claim then it is unlikely that the claimant will fully remember the particular wording used at the time of the agreement, which opens the possibility of a defence for the defendant over a lack of certainty presented by the claimant. 

Further issues may also be encountered when proof is needed of the specific time that the agreement was made if the claimant did not keep a diary of their whereabouts during that time, or there are no witnesses willing to confirm the place of contract.

Legal Requirements for Writing in Certain Circumstances

If you need to receive or process personal data as one of the requirements of your agreement then it will be impossible to do so unless the agreement is done through a written contract as per Article 28 of the GDPR. A similar problem can also be seen when handling intellectual property (IP) as the transfer and ownership of IP will require evidencing that will specifically be in writing, further encouraging the use of a written contract instead.

Possible Extra Costs and Risks

Another result of an oral contract lacking certainty as to its terms and circumstances is the very real possibility of court costs substantially increasing should a dispute arise. This is due to the much heavier time and effort being placed on interpretation and litigation, as the court will be more likely to spend more time on witness statements, and evidence gathering on the time, place and people surrounding the agreement in order to gather as much evidence as it can of the agreement and its terms. If the terms of the agreement were to be written down then these extra steps would no longer be anywhere as necessary to do, very likely lowering the cost of litigation as a result.

Specialist Contract Advice

Monarch Solicitors specialist contract solicitors provide a tailor-made approach to your needs and can help with a range of commercial contracts and contract disputes. Please get in touch with us by either calling 0330 127 8888 or emailing [email protected] for an initial consultation.


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