By Solomon Runsewe
For an oral contract to be valid there must be an offer, an acceptance, a legal consideration and an intention to be legally bound. An offer is an expression of readiness to contract on terms specified or implied by the offer or (one who makes an offer to another)
Very wide question and it depends on the nature of the transaction. For instance in land transaction, oral agreement must be made in the presence of a third party.
Oral agreements are not enforceable when they fall under the category of statute of frauds. It is an old law that prevents deceitful behavior and has long duration or high stakes. The Statute of Frauds mandates certain agreements in writing for various contracts: Land.
An oral contract is a verbal agreement that may be legally binding and enforceable. Much like a written contract, the parties enter into an agreement to either do or not do some obligations.
There are two main differences between an oral contract and a written contract.
The first and most obvious is that an oral contract is a verbal agreement. The second is that oral contracts are spoken, meaning there is no further proof that it was created other than the parties or witnesses who heard it.
As such, courts prefer that parties formalize their agreements in writing (i.e., a written contract). This way if a future dispute arises over the terms of the contract, then there is concrete proof demonstrating what the parties agreed to and potentially, what intentions were set when initially forming the oral contract.
Just like a written contract, an oral contract must be valid to be legally binding on the parties. It must satisfy certain basic requirement in order to be enforceable. For an oral contract to be valid there must be an offer, an acceptance, a legal consideration and an intention to be legally bound.
An offer is an expression of readiness to contract on terms specified or implied by the offeror (one who makes an offer to another). An acceptance on the other hand is a reasonable assent, communicated by the offeree (a person to whom an offer to enter into contract is made) in agreement to the terms made in the offer.
While legal consideration, is some benefit received by a party who gives a promise or performs an act, or some detriment suffered by a party who receives the offer. It can also be referred to as the motive, price or impelling influence that induces a party to enter into a contract.
There must also be a clear intention to create legally binding relations, unequivocally expressed by both parties. The parties must have the legal capacity to contract because a person under 18 (eighteen) years of age cannot enter into a valid contract under Nigerian law.
A court is unlikely to uphold the terms of a contract which does not have the essential elements of a valid contract. Nevertheless, a contract made orally, without its terms being reduced to writing and signed by the parties can still be valid and binding. The real problem is establishing that a contract actually exists and its terms.
In order to prove oral contract, the party that asserts the existence of such a contract is required to prove such fact by adducing credible evidence on the existence of the contract and its terms by;
Some form of communications may substantiate the oral contract between the parties. This include letters, email correspondence, text messages, receipts, photographs, notes, quotes, faxes, bills of quantities, evaluation and other communication in a written form.
There is a need to understand the concept represented by the term ‘customary law’ under Nigerian legal system. Simply put, Customary law is, by definition, means the established ‘unwritten principles’ understand and acceptable ways of life by the natives of a given society. Customary law are the accumulative customs of indigenous peoples and local communities.
According to one widely recognised definition of customary law, customary law are “customs”, the traditional “rule of conduct, obligatory on those within its scope, established by long usage. Hence, a valid custom must be of immemorial antiquity, unwritten but certain and reasonable, obligatory, not repugnant to Statute Law, though it may derogate from the common law. Particular customs are the usage of particular traits. Local customs are customs of certain parts of the country.
The implications of these facts about customary law are that customary laws are made up of customs that are accepted as legal requirements or obligatory rules of conduct; practices and beliefs that are so vital and intrinsic a part of a social and economic system that they are treated as if they were written (in the consciousness of the native people as) laws.
The import of these elements of customary laws are that customary laws are unwritten but certain and generally acceptable as the way of life. In other words, for an agreement to be enforceable under customary law, such an agreement must be unwritten but orally verifiable.
The agreement must identify parties involved, the intention of the parties and the ascertainable obligations and responsibilities which are not repugnant to a reasonable man that is under the application of the customary law. The responsibilities, obligations and reciprocal duties are known as ‘consideration’ under the English law.
Therefore, the conditions for the enforcement of oral agreement under the customary law are:
- A) certainty or verifiability of parties,
- B) Voluntariness of parties involved,
- C) There must be duties, obligations and benefits, and
- D) The duties, obligations and benefits must not be repugnant to an average natives of the community.
Despite popular belief, oral contracts are enforceable. They usually are not in your best interests, and end in a “he said, she said” battle. But as long as there is enough evidence, a court will enforce an oral agreement. However, there is one particular exception to this rule, and it’s called the Statute of Frauds.
Generally, there is an erroneous opinion that unwritten contracts are unenforceable. However, contrary to this opinion, a contract can arise out of any discussion, obligation or instruction to do an act as far as the elements of a contract are present and still be enforceable.
According to the Court in U.T.C. (Nig) Plc v. Philips  6 NWLR Pt. 1295, Pg.“An agreement or a contract can be made and given effect to whether in writing or verbally done or even established by conduct of the parties from which the agreement may be inferred”
An unwritten contract is a contract whose terms were not reduced into writing, that is, a contract that has been made but which has not been written down. In ordinary English parlance, it may also be referred to as a “gentleman’s agreement”. It can take any of the following forms;
Oral: This is when a contract is formed via spoken communications without being recorded in writing, Implied from the act of the parties: This is when a contract is derived from actions, conducts or circumstances of one or more of the parties to an agreement.
The legal implications stemming from entering an unwritten contract depends on the terms of the contract. The legal implications of an unwritten contract will be discussed in respect of its formation, breach, level of breach, conditions and the Statute of Frauds.
An unwritten agreement does not automatically translate to a contract. The unwritten contract whether formed by spoken communications or implied from the conduct of the parties must contain all the necessary elements of a valid contract. There are several requirements that must be met in order to form an unwritten contract;
Entering into an unwritten contract is one thing, but proving that the contract exists, or that specific terms of the contract exist, is entirely different. This is because an unwritten contract is not reduced into writing, so it is difficult but not impossible to prove the existence of such contract. The following are ways by which the existence of an unwritten contract can be provides.
Written communications between the parties to the contract in respect of the contract may help substantiate the existence of such contract. Examples of this written communications may include emails, letters, text messages or other correspondences between the parties which confirm the terms of the contract or discusses key terms of the contract.
Purchase orders, invoices, receipts, delivery dockets or bank statements showing payments that demonstrate an exchange of money between the parties and other written communications.
Testimony of witnesses/ third parties: Where other persons were present when the unwritten contract was entered into or performed by the parties. Such persons as witnesses may testify to the existence of the unwritten contract or terms of the contract.
Unwritten contracts are valid and enforceable. Although there are some contracts required to be in writing by virtue of section 4 of the Statute of Frauds (1677), however, with the intervention of equity, the courts have devised the doctrine of part performance to avoid strict application of the Statute in order to prevent fraud.
Despite popular belief, oral contracts are enforceable. They usually are not in your best interests, and end in a “he said, she said” battle. But as long as there is enough evidence, a court will enforce an oral agreement.
However, there is one particular exception to this rule, and it’s called the Statute of Frauds.
The centuries-old law, as its name implies, is designed to prevent deceitful, fraudulent conduct especially when contracts have high stakes or long duration.
Therefore, it must satisfy certain basic requirement in order to be enforceable. For an oral contract to be valid there must be an offer, an acceptance, a legal consideration and an intention to be legally bound.