Jul 25
For a variety of reasons, your business might have entered into an oral agreement with another party. This could be because the other party does not want to be too formal, or you may have had to agree a supplier or customer contract very quickly without the time you would usually prefer in order to properly document that contract before agreeing to it. It might also arise when an existing contract is being varied to address an issue that has arisen.
If something then goes wrong which is covered by that oral agreement, the lack of a written contract can create interpretation issues and misunderstandings that must be cleared up in order to resolve the dispute. If you find yourself in that situation, all is not lost. However, it will usually require some careful unravelling, in order to ensure that any dispute can be resolved and the parties can move on.
Yes, oral contracts are legally binding in England and Wales.
An oral contract is the same as a written contract in that there must be an offer made, an acceptance of that offer, and some consideration must be paid under the contract. Both parties must have the intention to be bound by the oral contract.
While an oral contract is legally binding, it is inevitably harder to provide evidence of the specific terms of that contract than if it were a written one.
In addition, it is likely that if you have entered into an oral contract, you may not have considered and agreed upon all of the terms that you might need to have agreed on, making it harder to determine key issues later.
For example, you might agree an oral contract to supply a business with your product. You may have agreed quantity and price orally. However, you should also agree issues such as warranties, liability if you cannot deliver on time or the expected amount, or if payment is not made when expected, how to terminate a contract, and how to resolve disputes without court intervention.
These issues can be difficult to resolve when something goes wrong if there is no written record, or if they have not even been considered.
If you have a dispute following an oral contractual agreement, you will have several remedies open to you to resolve that contractual dispute.
The first step may be to try to resolve the issues by a form of ‘Alternative Dispute Resolution’ (ADR). For instance, it may be that a resolution to the dispute can be negotiated; this may also have the advantage of saving the commercial relationship and allowing you to continue to work together in the future. Resolving a dispute relating to an oral agreement that involves keeping the agreement alive may also present a good opportunity to agree the specific terms of the agreement and formalise the terms in writing to avoid any future misunderstanding or dispute.
If a dispute cannot be resolved, then court proceedings can be brought for breach of contract. However, careful consideration should be given to the evidence available to prove the existence of an oral agreement or a specific term in an oral agreement, before embarking on court proceedings.
If an independent third party, be it an adjudicator or judge has to decide how to resolve your dispute for you, they will want to see any evidence of the agreement made. An oral agreement is far harder to evidence than a written agreement, but not impossible.
You may have contemporaneous evidence from the time that oral contract was agreed. For example, do you have:
An oral contract is unlikely to be as easy to enforce as a written contract. However, it is still possible to resolve a dispute over an oral contract with the right assistance.
If your business is in dispute over an oral contract, it is important that you consult an expert to ensure that you capture all of the evidence that you need, and proceed in the best way possible to resolve the issue, based on all of the circumstances.
For further information and assistance, please contact Matthew Hill, Head of Dispute Resolution at Raworths based in Harrogate North Yorkshire at matthew.hill@raworths.co.uk or telephone 01423 566 666
Published on 17 July 2025
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
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