Legal Ease by Shane Givens
Jan. 18, 2011

Is a verbal contract binding?

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Most of the time, a civil lawsuit has as one of its elements a verbal agreement between the parties involved. In Alabama, a verbal agreement is binding; however, when disputes arise between people who are relying on a verbal agreement, the interpretation and/or existence of these agreements winds up in court. So, although verbal agreements are binding, they are sometimes dangerous and costly.

When disagreements arise, verbal agreements are almost always vary depending on who you are talking to. The price, quality, or delivery is misunderstood, or the workmanship, timeliness, or specifications of a project are in controversy, etc. The danger of a verbal agreement, then, is that the specifics of the agreement are either not clear, or not clearly understood by the parties involved. This principle not only applies to those unscrupulous people who would misrepresent or lie about the existence or terms of an agreement, but also to honest people who simply didn't discuss the deal in detail.

I have represented several people who provided a product or a service to the general public. Despite my insistence on written agreements with customers or clients, many them simply refuse to do so. Many times, this is because people believe requiring someone to sign a contract or agreement means implying that they do not trust the other person. This principle, though noble, usually ends in disaster.

For example, if you are a home-builder, there are several areas of the project that need to be discussed and agreed upon before the project begins. Among the most important is how to handle add-ons, extra work, or upgrades not originally figured into the original quoted price. You can bet that if the builder and client have not come up with a specific plan for these “extras” they will be calculated differently and argued about when the final bill rolls in. If the builder has a well-written contract, however, the parties can go back and be sure of how they agreed to calculate these expenses. In this way, a clear, written agreement works to protect both of the parties. The builder can't go back and add on exorbitant fees, and the home owner can't argue that the additions were part of the original agreement. Additionally, as covered in a previous article, a written contract with provisions for award of attorney's fees and court costs is, many times, the only way to get the losing side to accept responsibility.

In the end, for the protection of all parties involved, any agreement worth having is worth writing down and signing, and although writing it down yourselves is better than nothing at all, the best course of action is to have an attorney draw up the agreement for you.

This column is intended for general information purposes only. The answers to most legal problems rely on specific facts of a particular situation; therefore, it is very important to see a lawyer when these situations arise. 

Please e-mail questions for future columns to givenslaw@tds.net.