Are Verbal Agreements Binding In BC?

Written contracts are widely regarded as one of the safest ways to establish an agreement. Having a contract in writing provides tangible proof of terms, which can be incredibly important to have if one party fails or refuses to uphold their end of the deal. However, what some people might not realize is that verbal agreements can also carry legal weight. In BC, simple handshake deals or spoken promises can, in some cases, be legally binding. To protect your intentions regarding your assets, you should familiarize yourself with BC’s estate litigation laws, particularly those concerning the validity of verbal contracts and wills.

Verbal contracts can indeed be legally binding, but they must meet certain criteria to be enforceable. For a verbal agreement to be valid, it must contain key contractual elements, including:

• An offer and acceptance: There needs to be a clear proposal made by one party that is accepted by another. This creates the agreement terms.
• Consideration: This refers to something of value being exchanged between parties, such as money, goods, or services.
• Intention: All parties involved must intend for the agreement to be legally binding and enforceable, ensuring everyone is committed to fulfilling their obligations.
• Legality: The subject matter of the verbal contract must be legal. You cannot form a verbal agreement based on illegal actions.
• Capacity: All parties must be of sound mind and body to make a verbal contract, and provide voluntary consent.

While some verbal agreements are valid, there are specific situations where they aren’t. In these cases, the law requires a written agreement for clarity, accountability, and legal protection. Some examples of verbal agreements that are not enforceable include:

• Real estate transactions: Any verbal contracts related to the sale or transfer of real estate must be in writing.
• Certain goods or securities: High-value goods or securities require written contracts.
• Marriage-related agreements: Terms relating to marriage, like prenuptial or postnuptial agreements, must be in writing.
• Agreements not performed within a year: If the terms or conditions of an agreement can’t or won’t be fulfilled within a year, the agreement must be written.
• Paying another’s debts: A verbal agreement to pay someone else’s debt is typically not enforceable unless it is put in writing.

A will cannot be created through a verbal agreement. So, what makes a will legally binding? In BC, a valid will must be written and signed by the testator, with two witnesses who are at least 19 years old present. Any verbal promise made about how assets will be distributed after death is not legally binding. This is a crucial point to understand—verbal statements regarding inheritance are not enforceable unless they are also part of a valid, written will.

In some cases, even if a verbal agreement doesn’t meet all the necessary elements of a contract, it might still be enforceable due to the concept of detrimental reliance. Detrimental reliance occurs when one party reasonably relies on the promise made by the other party, and as a result, they suffer harm or loss.

For example, imagine someone verbally agrees to provide a service. The other party, relying on this promise, begins making preparations like hiring staff or purchasing materials. If the agreement is later broken, the harmed party could argue that they relied on the promise to their detriment. In such cases, the court may choose to enforce the agreement or require the breaching party to compensate for any losses incurred due to their failure to fulfill the verbal contract.

One of the challenges of a verbal agreement is proving it in court. While these arrangements can be upheld in a legal setting, they must be backed by sufficient evidence. If one party breaches a verbal contract and the other party takes legal action, the case’s outcome depends on the clarity of the terms and the evidence available. Acceptable evidence might include witness testimonies, written communication like emails or text messages referring to the agreement, or proof of actions that align with the verbal terms like starting the work or making a payment.

Verbal contracts are appropriate in a few situations. Small, personal transactions between friends or family members are a safe option. Short-term or informal arrangements like occasional lawn mowing, babysitting, or pet sitting also make sense as verbal contracts. Ideally, you should only consider making verbal contracts with those you trust. Even in these situations, it’s worth remembering that having a written agreement is still the safer and clearer option. Written contracts provide a solid foundation in case of misunderstandings or disputes down the line.