Verbal Agreements Law in Australia: What You Need to Know

In Australia, verbal agreements are legally binding, just like written agreements, as long as they meet certain requirements. However, proving the terms of a verbal agreement can become difficult without written evidence. In this article, we’ll discuss the details of verbal agreements law in Australia, including what is required for them to be legally binding and the potential risks involved.

What is a Verbal Agreement in Australia?

A verbal agreement, also known as an oral contract, is an agreement between two or more parties that is made verbally, without written documentation. This type of agreement can be made for almost any transaction or arrangement, including employment, leasing or tenancy, lending money, and purchasing goods or services.

Are Verbal Agreements Enforceable in Australia?

Yes, verbal agreements are enforceable in Australian law, but only if they meet certain requirements. To be legally binding, the terms of the agreement must be clear and unambiguous, and all parties must agree to the terms without any coercion or misrepresentation.

Additionally, some types of agreements must be in writing to be enforceable, such as contracts involving real estate, leases for a term exceeding three years, and contracts for the sale of goods exceeding $5,000. However, there are exceptions to this rule, such as when the terms are partly written and partly verbal, or when there is evidence of performance of the agreement.

Proving the Terms of a Verbal Agreement

One of the main difficulties with verbal agreements is proving the terms of the agreement in court, as there is no written documentation to rely on. This means that it can be challenging to enforce the agreement or resolve any disputes that may arise.

To overcome this challenge, it is important to have witnesses to the agreement, such as friends or family members who were present at the time the agreement was made. Additionally, any correspondence or records related to the agreement, such as text messages or emails, can be used as evidence in court.

The Risks of Verbal Agreements

While verbal agreements may be tempting due to their convenience, there are significant risks involved. Without written evidence, there is the potential for misunderstandings and disagreements to arise, which may be difficult to resolve. Furthermore, verbal agreements may be more easily forgotten or denied by one or more parties.

To avoid these risks, it is always advisable to put any agreement in writing, no matter how small or informal it may seem. This not only provides a record of the agreement but also ensures that all parties are clear on the terms and conditions.

Conclusion

In conclusion, verbal agreements are legally binding in Australia, but only if they meet certain requirements. While they may be convenient in some situations, they come with significant risks and potential challenges. Therefore, it is always advisable to have any agreement put in writing, no matter how small or informal it may seem. By doing so, all parties are clear on the terms and conditions, and there is a record of the agreement that can be relied on if needed.