Oral agreements are contracts made without the use of any written document. In India, oral agreements are also considered legally binding like written agreements under certain circumstances. However, oral agreements can often lead to disputes due to the absence of a written document that clearly defines the terms and conditions of the agreement. In this article, we will discuss the legal aspects of oral agreements in India and the circumstances in which they are considered binding.

Legal validity of oral agreements in India

The Indian Contract Act, 1872 governs the law regarding contracts in India. According to Section 10 of the Act, a contract can be made in any form, whether oral or written. Therefore, an oral agreement is legally binding if it fulfils the following conditions:

1. Offer and acceptance: There must be an offer made by one party and acceptance by the other party. Both parties must agree to the terms and conditions of the agreement.

2. Intention to create legal relations: Both parties must have the intention to create legal relations. This means that both parties must be willing to comply with the terms and conditions of the agreement.

3. Consideration: There must be some consideration, which means that both parties must get something in return for their agreement. The consideration can be money, property, or services.

When is an oral agreement considered legally binding in India?

An oral agreement can be considered legally binding in the following circumstances:

1. Where the agreement is for a short duration and does not involve a large amount of money, such as a contract for small services.

2. When the parties have been dealing with each other for a long time and have established a certain level of trust and understanding.

3. Where the parties have already performed their part of the agreement and accepted the benefits of the agreement.

4. When a court decides that an agreement is valid despite not being in writing.

5. When the oral agreement is explicitly recognized by law such as in matters pertaining to family law or in the case of lease agreements for a duration of up to 11 months.

Challenges with oral agreements

Although oral agreements are legally binding in India under certain circumstances, they are still susceptible to challenges. The biggest challenge is the lack of evidence to prove the existence and terms of the agreement. In the absence of a written document, it becomes difficult to prove the agreement’s terms, making it easier for a party to deny the existence or terms of the agreement.

Another challenge is the issue of enforcing an oral agreement. If one of the parties does not fulfil their obligations, it becomes difficult to enforce the agreement as there is no written document to support it. In such cases, the parties have to seek legal assistance to enforce their rights, which can be time-consuming and costly.

Conclusion

In conclusion, oral agreements are legally binding in India like written agreements, provided they fulfil the necessary conditions. However, oral agreements are susceptible to challenges due to the lack of evidence to support their terms and enforceability challenges. Therefore, it is always advisable to have a written agreement when dealing with contracts involving significant amounts of money or long durations. A written agreement ensures that there is clarity in the terms and conditions of the agreement and provides evidence to support it in case of any dispute.