Oral Contract

An agreement made with spoken words and either no writing or only partially written. An oral contract is just as valid as a written agreement. The main problem with oral contracts is proving its existence or the terms. As one wag observed:”An oral contract is as good as the paper it’s written on.” An oral contract is often provable by action taken by one or both parties which is obviously in reliance on the existence of a contract. The other significant difference between oral and written contracts is that the time to sue for breach of an oral contract (the statute of limitations) is sometimes shorter.

The term statute of frauds comes from an English Act of Parliament (29 Chas. 2 c. 3) passed in 1677(authored by Sir Leoline Jenkins and passed by the Cavalier Parliament), and more properly called An Act for Prevention of Frauds and Perjuries. And recently in December 2004 the British court ruled out that oral contract is enforceable. The Statute of Frauds 1677 was largely repealed in England and Wales in 1954, with the exception of the requirement as it relates to surety for another’s debt. The main problem for the oral contract is implementation. If one party deny any clause or condition then for the enforcement it is difficult to prove the oral contract. Otherwise the oral contract is easy and good. Its modification n is very easy and it can be terminated with the consent of the both parties. If both the parties are sincere then its execution is easy and can be enforced. There is no binding in the law that contract may be written.

For saving the Government stamp duty and engaging the lawyer sometimes parties entered into oral agreement. Although it is enforceable but proving in the court it is difficult. Article 70 of the Qanoon Shahdat 1984 says if evidence is reliable then can be sufficient which is cardinal principle of evidence. As per Article 71 of the Qanoon Shahdat 1984 the oral evidence must be direct.

An oral contract is enforceable unless its subject matter comes within the statute of frauds, an English Law adopted in the United States, that requires certain contracts to be in writing. For example, a contract to sell real property, to be enforceable, must be in writing to comply with the statute. An oral contract to sell Personal Property for an amount less than that set in the statute does not fall within its limits and, therefore, is enforceable without being reduced to writing.

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