Verbal agreements in South Africa are as binding as contracts as written ones. However, one must prove that there is in fact a valid agreement in place, as well as the terms and conditions of that agreement. Since memories are fallible and fade over time, this allows room for inaccuracies and inconsistencies between parties regarding what was agreed.
There are, of course, exceptions to the rule that verbal agreements are legally binding, and some contracts must be in writing to be valid. These contracts include antenuptial contracts, contracts for the sale of immovable property and suretyship agreements.
For any contract to be valid, there are some essential elements which need to be present:
1. Possibility - it must be possible for the parties to perform in terms of the contract,
2. Capacity – this relates to the age and mental capacity of parties. All parties must be able to understand the rights and obligations under the contract. The following type of people generally lack the capacity to enter into a valid contract, i.e., children under the age of 18 years (minors) and persons suffering from mental health illness.
3. Lawfulness – the contract must be lawful and not prohibited by statutory or common law,
4. Offer and acceptance - The offer must be made with the intention to be bound by the acceptance. Similarly, the acceptance must be made with the intention to enter into a legally binding agreement, and
5. Formalities - Certain contracts require compliance with certain formalities, eg. it must be reduced to writing, must be signed or signed in front of a notary and subsequently registered in the deeds office.
In the case of verbal contracts, there needs to be some form of evidentiary proof to prove the existence of an agreement. This proof may include:
1. recording, or taking notes of a conversation;
3. letters, emails and/or text messages (like SMS or Whatsapp). According to the Electronic Communications and Transactions Act (ECTA) 25 of 2002, all electronic messages are considered to be equivalent to writing. However, it should be noted that the ECTA requires data messages to be easily accessible to all parties involved.
4. proof of payment, quotes or transactional statements showing the offer and/or acceptance.
While verbal agreements are for the most part valid, legally binding, and enforceable, it is generally recommended for agreements to be recorded in a clear and concise written contract that lays out all the relevant terms and conditions to an agreement. Not only does this provide clarity for all parties, but in the event of disagreements, it offers guidance to legal representatives to ensure a fair resolution.
Written by Annelise Petzer, SchoemanLaw