When it comes to doing business, contracts are an essential part of any agreement. However, not all contracts are written. In some cases, verbal contracts are used to seal a deal. But how legally binding are verbal contracts in Singapore?
Verbal contracts, also known as oral contracts, are agreements that are made through spoken words rather than a written document. They are often used in situations where parties have a good relationship and trust each other, such as between friends, family members, or long-standing business associates.
In Singapore, verbal contracts are legally binding and enforceable under certain circumstances. According to the Singapore Contracts Act, a verbal contract is considered valid if the following conditions are met:
1. Offer and acceptance: There must be a clear offer made by one party and acceptance of the offer by the other party without any condition or reservations.
2. Consideration: Consideration refers to something that benefits one party or causes a detriment to the other party. It could be money, goods, services, or anything else that has value.
3. Intention to create legal relations: There must be an intention by both parties to create a legally binding agreement.
4. Capacity to contract: Both parties must have the capacity to enter into a contract. This means they must be of legal age, mentally capable, and not under any duress or undue influence.
However, there are some limitations to verbal contracts in Singapore. For example, contracts for the sale of land, property, or shares must be in writing to be legally binding. Additionally, contracts that require a certain amount of time to perform, such as a contract for services over a period of months or years, must also be in writing.
In the event of a dispute over a verbal contract, it can be more challenging to prove the terms of the agreement without a written document. This is why it is always recommended to have a written contract whenever possible. This will ensure that all parties understand the terms of the agreement and have a clear understanding of their obligations.
In conclusion, while verbal contracts can be legally binding in Singapore, they are subject to certain limitations. It is always advisable to have a written agreement whenever possible to avoid any confusion or misunderstandings. If you have any concerns or questions regarding verbal contracts, it is best to consult a legal professional.