What is an oral contract?

An oral contract is an agreement formed through verbal communication between two or more parties without the use of written documentation. In North Carolina, oral contracts are considered legally binding, and therefore both parties must fulfill their end of the agreement as promised. There are a few key components that must be present in order to create a valid oral contract. First, an offer must be made and accepted, meaning both parties must agree on the terms of the contract and come to a mutual understanding. Both parties must also intend to be legally bound by the agreement and have the capacity to do so, meaning they are of lawful age, mentally capable, and understand the details of the agreement. Lastly, the agreement must be supported by consideration, which is something of value that is exchanged for the promise of the agreement such as money or goods. Given the lack of written documentation with oral contracts, proving their validity can be difficult. In North Carolina it is up to the courts to decide if the agreement is enforceable. The courts consider the actions of the parties such as evidence of payment, testimony from witnesses, and other circumstantial evidence. In situations where an oral contract involves a large amount of money, it is highly recommended that both parties get the agreement in writing. This form of documentation will provide additional protection and make it easier to enforce at a later date.

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What is an oral contract?

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