Is a verbal agreement legally binding? Although verbal contracts are binding under South African law, it is often important, and in some circumstances necessary, to put something in writing.
When is a verbal agreements legally binding?Verbal contracts have their place in certain situations and are both simple and convenient. However, while binding, verbal contracts are often difficult and complicated to enforce in a legal dispute. This is because there is no objective and clear record of the agreement details, and the specific terms are typically difficult to ascertain. This becomes an issue if there is disagreement between the parties to such a contract, and identifying an accurate solution or remedy can be a difficult and lengthy process.
As a result, legal professionals always recommend creating a clear and concise written contract that lays out all the relevant terms to an agreement. Not only does this provide clarity for all parties to the contract regarding the rights and responsibilities of each party, but in the event of a disagreement, it offers useful information and guidance to legal representatives to ensure a fair and smooth resolution.
When it comes to a lease agreement, a written contract is strongly recommended as it provides details of important terms such as the monthly rental amount, the required notice period as well as the condition of the property and maintenance requirements from both landlord and tenant. It is common for disputes to arise as to whose responsibility it is to manage certain expenses and certain obligations. Having a written contract for lease agreements simply removes room for error and clearly lays out the details for all parties to refer to when needed.
For the sale of immovable property, a written contract is a legal requirement as set out in the Alienation of Land Act (68 of 1981). It is not hard to understand why this requirement exists for such high-value transactions. An offer to purchase, which constitutes the sale agreement once signed by both buyer and seller, sets out all the details from sale price and occupation date to fittings and fixtures that form part of the sale as well as certain conditions that have to be met in order for the sale to be valid.
It is also good practice to have a disclosure document as part of the sale agreement which details the condition of the property to eliminate any disputes that may arise as to maintenance required from the seller post sale. It would simply be far too complicated to manage such an agreement in verbal terms and would allow endless opportunities for disagreement around a highly valuable commodity.
As such, while the verbal contract remains an appropriate agreement in certain circumstances, for the sale of immovable property, a written contract is an essential criterion under South African law.