A recent judgment of the New South Wales Supreme Court serves as an important reminder that verbal agreements can be just as enforceable as written agreements. In the case of Yulema Pty Ltd & Anor v Simmons & Anor [2015], the Supreme Court upheld contractual obligations imposed by a verbal agreement in October 2009. As a result, the defendant was required to pay the plaintiff approximately $350,000 plus interest from May 2011. It is significant to note that the Court upheld the agreement notwithstanding that one of the parties involved in the negotiations was unable to give evidence because they had passed away.
The judgment serves as a pertinent reminder that a verbal contract can be equally as enforceable as its written equivalent. People generally associate legally binding contracts with written documents which are required to be signed or stamped. However, the reality is that contracts may be oral, written or a combination of both. There are few contracts that are legally required to be in writing. Verbal agreements are generally considered to be oral contracts and will be legally binding.
Despite the decision, there is no doubt that a written contract documenting an agreement is preferable to a verbal contract. The reason being, a written contract will be easier to prove if a dispute eventuates.
If you have any further questions on the judgment, or for further information, please contact:
Leneen Forde
Principal
Sladen Legal
03 9611 0142
lforde@sladen.com.au
or
Annabelle Moylan
Lawyer
Sladen Legal
03 9611 0148
amoylan@sladen.com.au