Verbal Contracts in Canada: Understanding the Legal Implications
When most people think of contracts, the first thing that comes to mind is a written agreement signed by both parties. However, verbal contracts are also legally binding in Canada. In fact, they can be just as enforceable as written contracts in certain situations.
In this article, we’ll explore the legal implications of verbal contracts in Canada and what you need to know to stay protected.
What is a Verbal Contract?
A verbal contract is an agreement between two parties that is made orally (i.e., spoken) rather than in writing. These types of agreements are often made in everyday business dealings, such as between a contractor and a client or during a negotiation between two business partners.
In Canada, verbal contracts are legally binding, provided that they meet certain requirements.
Requirements for Verbal Contracts
To be considered legally binding, a verbal contract must meet the following requirements:
1. An Offer: One party must make an offer to another party.
2. Acceptance: The other party must accept the offer.
3. Consideration: Both parties must exchange something of value, such as services, goods, or money.
4. Intention to Create Legal Relations: Both parties must have the intention to create a legally binding agreement.
5. Capacity: Both parties must have the legal capacity to enter into a contract. This means that they must be of legal age and mentally competent.
When these requirements are met, a verbal contract can be just as enforceable as a written contract.
Enforcing a Verbal Contract
If you enter into a verbal contract and the other party breaches it, you may be able to take legal action to enforce the agreement. However, enforcing a verbal contract can be more difficult than enforcing a written contract, as there is no written record of the agreement.
To enforce a verbal contract, you may need to provide evidence that the agreement was made, such as witness testimony or any documentation that supports your claim. This can be challenging, particularly if the other party denies that the agreement was made.
To protect yourself, it’s always best to get any agreements in writing. This way, you have a clear record of the agreement in case of any disputes down the line.
In conclusion, while verbal contracts are legally binding in Canada, they can be more difficult to enforce than written contracts. To protect yourself and your business, it’s always best to get any agreements in writing.
If you do enter into a verbal contract, make sure that all of the necessary requirements are met, and keep a detailed record of the agreement. This way, you’ll be better protected in case of any disputes that may arise.