Oral Agreement Contract Law in Singapore: Understanding Your Rights and Obligations

In Singapore, oral agreements can be legally binding under certain circumstances. However, it is important to understand the limitations and risks of relying solely on oral agreements.

What is an oral agreement?

An oral agreement, also known as a verbal agreement, is a spoken agreement between two or more parties. Unlike written agreements, oral agreements are not documented in writing and are usually made without the assistance of a lawyer.

Is an oral agreement legally binding in Singapore?

Yes, an oral agreement can be legally binding in Singapore, but there are limitations. According to the Singapore Contract Law, a contract can be created either in writing or orally, as long as it meets the following requirements:

1. Offer and acceptance: There must be a clear offer made by one party and an acceptance by the other party.

2. Intention to create a legal relationship: Both parties must have the intention to create a legal relationship, which means that the agreement is not just a casual conversation or a social arrangement.

3. Consideration: There must be something of value exchanged between the parties. This can be money, goods, or services.

4. Certainty: The terms of the agreement must be certain and clear enough for a court to enforce them.

When is it risky to rely on oral agreements?

While oral agreements can be legally binding, they can also be risky. Here are some situations where it is risky to rely solely on oral agreements:

1. Complex agreements: Oral agreements may not be suitable for complex agreements which involve many parties or have many terms.

2. Difficult to enforce: Oral agreements are difficult to enforce as there is no written proof of the terms agreed upon by both parties.

3. Memory lapse: People have a tendency to forget the terms of an oral agreement over time, which could lead to disputes in the future.

4. Misunderstandings: As there is no written agreement, misunderstandings can easily happen between the parties.

What are the advantages of having a written agreement?

There are many advantages of having a written agreement, including:

1. Clarity: A written agreement ensures that all parties understand the terms of the agreement.

2. Enforceability: A written agreement can be enforced in court if one party breaches the terms of the agreement.

3. Documentation: A written agreement provides a clear record of the terms agreed upon by both parties.

4. Protection: A written agreement protects both parties from misunderstandings and disputes.

Conclusion

In conclusion, while oral agreements can be legally binding in Singapore, it is important to understand the risks of relying solely on them. In many cases, it is advisable to have a written agreement to avoid misunderstandings, disputes, and legal issues in the future. If you have any doubts or questions regarding an oral agreement, it is best to seek legal advice from a qualified lawyer.