Contractual arrangements are the bedrock upon which strong business relationships rest. Yet, a lot of small businesses try to forego the formalities of a contractual agreement, perhaps out of an interest in saving time and money, or maybe because they prefer to build their working relationships on the strength of their word. Regardless, entering into verbal agreements with and making verbal promises to other parties may lead to a legally binding contract whether you want it to or not.
When will a verbal promise constitute a binding contract?
When looking at this issue, a court will consider a number of factors. They include:
- Whether a realistic offer was actually made
- Whether that offer was accepted
- Whether a party relied on that verbal promise to accept the agreement
- Whether the party that relied on the promise did so to its detriment, meaning that it suffered harm as a result
Detrimental reliance is usually the key factor in these types of cases. So, you’ll want to assess if the wronged party lost out on another contractual arrangement by relying on the verbal promise, or if there was some other type of financial harm caused.
Protect your business interests as fully as possible
We know that it takes a lot to build strong business relationships. But you shouldn’t worry about if taking formal legal steps to create a legally binding contract will harm a given relationship. After all, you have to look out for you own business interests, which means providing yourself with clarity and security.
That said, if you find yourself facing a breach of contract issue, whether entailing a written agreement or a verbal promise, you might want to work closely with a skilled business law attorney who can help you gather the evidence and craft the arguments that you need on your side.