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Contractual arrangements are vital to the success of commercial enterprises. Contracts create trust between parties as they protect both parties if either do not uphold their obligations. In addition, either party can apply to the court for damages if they suffer a loss due to the contract. Parties usually form a contract in writing. However, occasionally, it is done verbally. The court can also find a contract has been implied through the conduct of the parties. However, when you write a contract, the parties will occasionally include oral terms. This article will outline whether oral terms in a written agreement are binding.

What Makes a Contract Binding?

Any term in a contract must satisfy the elements of an enforceable contract to be binding. These will be outlined in the table below. 

Clear Offer

One party must make a clear and unequivocal offer to contract on certain terms with another party.

Valid Acceptance

If the party that receives the offer is happy with the terms, they can accept it. However, the acceptance must be by the method stated in the initial offer. If the accepting party conveys acceptance in a way that was not in the initial offer, the acceptance may be considered null and void. If a party is not happy with the offer, they can make a counteroffer. This means the other party must now validly accept those terms.

Sufficient Consideration

For a contract to be binding, each party must offer each other some form of consideration. Consideration is a benefit or detriment that each party receives. If either party does not receive anything, the contract is ‘gratuitous’ and is not legally enforceable. Consideration must be sufficient for the purposes of the contract.

Intention

When both parties formed the contract, they must have intended the contract to be binding. If they did not have this intention, a court would not find a binding contract.

Certainty in Terms

The terms of the contract must be certain and not contain any ambiguity. This is to ensure that both parties know what they are getting themselves into. A contractual term must be specific and should refer to a person or a business rather than a class of persons.

 

When Are Oral Terms Enforceable in a Written Contract?

To determine if an oral term is enforceable in a written contract, the oral term must first be legally binding. This means it must meet all the elements of a binding contract. Generally, the contentious issue is whether the party intended for it to be binding. For example, if a party did not think an oral statement was part of a written contract, the courts would not enforce it.

Statements Made Before Contract Formation

Some statements that were made before the contract was written down might be considered binding. This is because they meet all the elements of a binding contract. However, there may be statements made by either party that were not intended to be binding. 

Mere Puff

One type of pre-contractual statement is called ‘mere puff’. Mere puff is a statement not intended to be binding but is instead seen as hyperbole expressed by a party. For example, a salesperson might say that something is the best on the market, but this is a subjective assessment.

Can I Stop Oral Terms From Being Included in a Written Contract?

The primary way parties can stop oral terms from being included in a written contract is by using a whole agreement clause. Generally, when an agreement is formed, there is an assumption that what was agreed will be the whole agreement. However, sometimes parties will argue that what was said in the negotiation phase could be binding. A whole agreement clause declares in writing that the agreement on paper is the total contract, which cannot be replaced through oral clauses. 

However, the court may overrule a whole agreement clause with an oral term that meets all the elements of a binding contractual clause.

Key Takeaways

You can form agreements in different ways, including written, oral and implied. Contracts can also be a mix of different methods. A common question that many people wonder about is whether you can include oral terms in a written agreement. If the terms meet all the elements of a binding clause, the oral term will be enforceable. However, often enough, oral terms do not meet these requirements. If they meet the requirements, it is prudent to check whether your contract has a whole agreement clause. In this case, it is likely that your oral term will not be binding as both parties would not have intended it to be binding. 

If you need any legal assistance with oral terms, LegalVision’s experienced contract lawyers can help. Call us today on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can mere puff be a binding term?

No, a term can only be binding if it satisfies the elements of a binding contract. Therefore, mere puff will not have an intention to be binding by either party.

Is a whole agreement clause permanently binding?

Like any clause, the court can overturn a whole agreement clause if all the elements of a binding clause are met.

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