Challenges of Verbal Contracts
Whenever two parties come together and agree that one of the parties will render services to the other in exchange for remuneration, an employment relationship will come into effect. When this happens, the agreement between the two parties is deemed to be an employment contract. Such contracts are usually reduced in writing and are then used as reference to establish the rights and obligations arising for each party. However, sometimes, we have instances wherein a contract is uttered orally and is not reduced to writing, leading to problems in the future where one party seeks to enforce the verbal contract.
Just like written contracts, verbal contracts are enforceable, and they do give rise to valid contractual obligations. The essentials of a verbal contract are the same as those of a written contract. There must be an offer and acceptance of the contract, the existence of consideration, the parties must have the capacity to enter into the contract, and the parties must intend to enter into the contract and create a binding legal relationship. It should, therefore, be noted that the courts will not endorse a verbal agreement where any of the essential elements of a valid contract have not been proved. The terms of the verbal contract must be proved, and there must be an agreement and understanding of the terms of the contract by the parties.
However, unlike a written contract, a verbal contract is one of the most difficult one to prove. This is problematic to the person seeking to enforce the contract as the law states that a party alleging the existence of a contract should lead evidence to demonstrate the existence of the contract and the parties’ understanding of the contract. Put differently, he who alleges the existence of the contract must prove the existence of the contract. This is easy to do when there is a written contract, as it can be adduced as evidence. However, when it comes to verbal contracts, it boils down to word of mouth, which is hardly sustainable in a court of law.
If one finds themselves in a position where they have to prove the existence of a verbal contract, all hope is not lost. In the case of Delta Beverages (Pvt) Ltd v Pyvate Investments (Pvt) Ltd HH 135/18, the court held that in the absence of a contract signed by both parties, the plaintiffs would be required to show that there was performance of the contract and that the parties relied on the agreement. This can be proved using evidence showing correspondence between the parties or evidence of the performance of the contract. This may include emails or any other written correspondence, transactional statements, notes made at the time of the agreement, and witnesses. The evidence will need to show the intention of the parties and the dealings between the parties after the alleged contract was concluded.
Therefore, as we have established above, the onus or burden is on the one seeking to enforce the verbal contract to prove the existence of the contract. As we have demonstrated, it is a tough exercise to prove certain elements of the contract in the absence of a written contract.
For more information relating to employment matters, kindly contact us on info@smarthrsolutions.co.zw or +263787658430.
Co-Authors:
Raphael Chigombe
Gareth Chagonda
Disclaimer: Take note that the above is our take on the law and should not be taken as the defacto position of the law.
