How Binding is a Handshake? Verbal Agreements in Court
In a world dominated by written contracts, many Australians still rely on verbal agreements sealed with a handshake. But how binding is such an agreement if a dispute arises? Under Australian law, verbal agreements can indeed be enforceable, provided they meet specific legal requirements.
Are Verbal Agreements Legally Binding in Australia?
In today’s world of formal contracts, many Australians still rely on verbal agreements sealed with a handshake. But how binding is a handshake agreement if disputes arise? Under Australian law, verbal agreements can be legally enforceable, provided they meet certain legal criteria.
A valid contract—whether verbal or written—requires the following elements:
Offer and acceptance: A clear offer by one party, accepted by the other.
Consideration : An exchange of something valuable, such as goods, money, or services.
Intention to create legal relations: Both parties must intend for the agreement to have legal consequences.
Certainty and clarity: The terms of the agreement must be defined and clear.
While verbal contracts are recognised, proving their terms during Litigation and Dispute Resolution can be far more challenging than with a written agreement.
Challenges of Enforcing Verbal Contracts
The greatest challenge in enforcing a verbal agreement is the lack of evidence. Courts depend on clear proof to confirm the existence and terms of a contract. Without written documentation, the case often comes down to one party’s word against another.
Common challenges include:
Lack of documentation: No written terms to rely on.
Conflicting recollections: Parties may recall the agreement differently.
Unreliable witnesses: Witness statements may be limited or inconsistent.
When Verbal Contracts Must Be Written
Not all contracts can be verbal. Australian law requires certain agreements to be in writing, including:
Contracts involving the sale of land or property.
Specific consumer credit contracts.
Family law-related agreements, such as parenting plans or financial agreements.
If these agreements are not documented, they will typically be unenforceable, no matter the verbal consent.
How Do Courts Assess Verbal Agreements?
When disputes over verbal agreements reach court, judges examine:
Conduct of both parties: Was there evidence of performance or reliance on the agreement?
Supporting documentation: Emails, letters, or texts referencing the agreement.
Financial records: Bank statements or receipts indicating payment.
Witness evidence: Third-party testimony about the terms agreed upon.
Courts also consider fairness and the intention to be legally bound when assessing verbal contracts.
Litigation and Dispute Resolution for Verbal Agreements
Disputes involving handshake deals frequently escalate into Litigation and Dispute Resolution processes. Before pursuing court action, methods like mediation, negotiation, or arbitration are often recommended as they are faster and more cost-effective.
If the matter proceeds to court, having an experienced legal team is crucial to present evidence, prove the contract’s validity, and protect your rights.
Always put agreements in writing: Even a simple written contract helps avoid misunderstandings.
Keep records of communications: Save emails, text messages, or notes.
Seek legal advice for major agreements: Especially those involving significant money or property.
A handshake might feel like a gesture of trust, but it does not offer the same legal protection as a written contract. While verbal agreements are enforceable under Australian law, proving them can be complex and time-consuming.
If you are facing a dispute over a verbal contract, expert legal advice is essential. New South Lawyers specialise in Litigation and Dispute Resolution and can guide you through the process.
Contact New South Lawyers today for expert advice and representation. Our dedicated team will protect your interests and help you achieve the best outcome.
