English Contract Law and Oral Contracts - Your Word May Still Be Your Bond


Verbal contracts have their place in English law -

Whether it was American movie mogul Samuel Goldwyn or the Australian/Irish politician Bryan O’Loghlen who first said, ‘A verbal contract isn’t worth the paper it’s written on’, with all due respect, they did not have this quite right and recent case law confirms they actually had it quite wrong, at least under English law. A contract forms once the parties have, to all outward appearances, agreed the same terms on the same subject matter, normally through offer and acceptance (Air Studios (Lyndhurst) Limited T/A Entertainment Group v Lombard North Central PLC [2012]). However, many who negotiate commercial contracts often assume that there is a further requirement of formality and they are not bound unless and until the agreement is reduced to writing and signed by the parties. This is not true, oral contracts most certainly exist, and they are certainly enforceable with a few exceptions, and have been for a very great number of years.

No written agreement -

The courts in England are not at all reluctant to find that binding contracts have been made despite the lack of a final writing and signature. Indeed, even in the narrow area where written and signed contracts are required (for example pursuant to the Statute of Frauds requirement that contracts for the sale of land must be in writing), the courts can find the requisite writing and signature in an exchange of emails.

Originally Published in Global Legal Post on May 1, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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