Difference between Oral and Written Contract

In business, contracts are a crucial part of any transaction or deal. They are a legally binding agreement between two parties that outlines the terms and conditions of their collaboration. However, not all contracts are created equal. There are two distinct kinds of contracts: oral and written. This article will explore the differences between oral and written contracts.

Definition of Oral and Written Contracts

An oral contract is an agreement that is made verbally or by word of mouth. It involves an exchange of promises between two or more parties without any documentation. Meanwhile, a written contract is a legally binding agreement that is documented in writing. It comprises the terms and conditions agreed upon by the parties involved in the deal.


One of the most significant differences between oral and written contracts is the level of formality required. Oral contracts are less formal and usually do not require any specific format. They do not necessarily need witnesses or notarization. On the other hand, written contracts are more formal and must be documented in a specific format. They often require witnesses and notarization, depending on the jurisdiction.


Another essential difference between oral and written contracts is their enforceability. Oral contracts are often challenging to enforce because they rely on the parties` verbal agreement and memory of the terms of the agreement. It can be challenging to prove the terms of the deal and whether or not the parties respected their obligations.

In contrast, written contracts are enforceable in court if one party breaches the agreement. They are easier to enforce because they provide a clear record of the parties` commitments and the terms agreed upon. If one party violates the contract, the other party can sue them and use the written agreement as evidence of the wrongdoing.


The duration of oral and written contracts also differs. Oral contracts are usually valid for a shorter period, generally a few months or weeks. This is because they are often used for simple transactions that do not require a long-term commitment. Written contracts, on the other hand, can be valid for an extended duration. This is because they are often used for more complex transactions that require long-term commitments.


In summary, oral and written contracts are two different types of agreements that businesses use to formalize their commitments. Oral contracts are less formal and documented in verbal agreements, while written contracts are more formal and documented in writing. The enforceability and duration of the contracts also differ. It is essential to understand the differences between oral and written contracts to choose the most appropriate option for a particular business deal. As a rule of thumb, it is always better to have a written contract to avoid misunderstandings or disputes.

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