Small businesses usually want to save as much time and money as possible, which sometimes means foregoing legal formalities. In many instances, these business owners also feel like legal documents get in the way of relationship building, which means that some of them tend to use verbal promises in place of written contracts. While this may speed business operations, it can create a significant amount of risk.
Is a verbal promise legally binding?
The risk comes from the enforceability, or lack thereof, of verbal promises. While some verbal agreements may be deemed legally enforceable, others won’t. To determine whether one of these agreements should be binding, you have to consider a number of factors, including:
- The type of offer that was made
- The nature of the offer and whether it was realistic
- The indicators of acceptance of the offer
- The previous dealing of the parties and whether they made and adhered to verbal promises in the past
- Whether reliance on the verbal promise served a detriment to either party
Each of these factors are important to the analysis. You’ll want to consider your history of dealing with the other side to see if you’ve traditionally carried out business on verbal agreements and whether financial harm was caused to the party who relied upon the promise when that promise went unfulfilled.
Competently navigate your contract dispute
Contract disputes arise all the time. For whatever reason, many small businesses just choose to eat their losses and move on. This can cause significant financial harm and leave your business’s reputation damaged. Don’t let that happen to you. Instead, educate yourself and surround yourself with those who can help you navigate this area of the law. Only then can you take comfort knowing that your interests are as fully protected as possible under the circumstances.