Verbal Agreement Contract Law Australia

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Verbal Agreement Contract Law Australia: What You Need to Know

In Australia, verbal agreements are legally binding and enforceable under certain circumstances. However, it is always advisable to have a written contract to avoid misunderstandings and disputes between parties. In this article, we will discuss the basics of verbal agreement contract law in Australia.

What is a Verbal Agreement?

A verbal agreement, as the name suggests, is an agreement made through spoken words and not in writing. It is also referred to as an oral contract. It can be a simple agreement between two individuals, or it can be a complex agreement between organizations.

Are Verbal Agreements Legally Binding in Australia?

Yes, verbal agreements are legally binding in Australia provided that they meet certain criteria. These include:

1. Offer and acceptance: There must be a clear offer made by one party and an acceptance of that offer by the other party.

2. Intention to create legal relations: Both parties must intend to be legally bound by the agreement.

3. Consideration: Both parties must provide something of value in exchange for the agreement. This can be in the form of money or a promise to do something.

4. Certainty of terms: The terms of the agreement must be clear and certain.

5. Capacity: Both parties must have the legal capacity to enter into the agreement. For example, minors and mentally incompetent individuals may not have the legal capacity to enter into a contract.

What Types of Verbal Agreements are Common in Australia?

Verbal agreements can be made for a variety of reasons. Some common types of verbal agreements in Australia include:

1. Employment agreements: It is common for employers to make verbal agreements with employees regarding their terms of employment.

2. Contracts for services: Verbal agreements are often made for services like home repairs, landscaping, and cleaning services.

3. Agreements for the sale of goods: Verbal agreements can be made for the sale of goods, although it is always better to have a written agreement to avoid misunderstandings.

What Are the Risks of Verbal Agreements?

Verbal agreements can be risky, as they are not as clear and specific as written agreements. Without a written agreement, it can be difficult to prove the terms of the agreement if a dispute arises. This can lead to costly legal battles and damage to relationships between parties.

In addition, verbal agreements may not be legally enforceable if they do not meet the requirements outlined above. This is why it is always recommended to have a written agreement in place.


In conclusion, verbal agreements are legally binding in Australia if they meet certain criteria. While they can be convenient, they can also be risky without a written agreement. When entering into a verbal agreement, it is important to ensure that all parties understand the terms and intentions clearly to avoid disputes. Having a written agreement can provide clarity and protection for all parties involved.

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