When Do Promises Become Legal Contracts?

In an ideal world, an agreement that involves an exchange of goods or services would be made in writing. One or both parties should provide written and signed proof of their intention to be bound by legal contracts before any action is taken to exchange goods or services. Thus, simplifying their relationship and legal situations if the need should arise.

However, in certain situations, words or conduct by one or both parties that communicate an intent to be bound by such an agreement will constitute a contract. Regardless of your situation, a basic understanding of contracts is essential. The following information will help you better understand how your statements—if accepted, even silently—can become legally binding contracts.

Understanding Legal Contracts and Offers

A business meeting may be a good setting to look at other candidate choices and hear what they have to say. However, stick to a high degree of professionalism and always be careful before making what could be considered an offer. If you say something, even with a low voice, and the person to whom it was said decides to accept it, then it is possible that what you said will become a legally binding contract, according to the law.

It would be best if you were very sure about the meaning of words and sentences; otherwise, you can find yourself in an unpleasant situation.

Legal Enforcement of Verbal Contracts

If one party makes a statement that causes another party to rely on it in such a way that the injured party suffers financial harm, then a court will enforce the statement as if it were a contract. In order for the court to enforce the promise, however, there must be evidence of an agreement or consideration between the parties—which means the parties must have exchanged something of value between them.

The court does not need to find an agreement or consideration in order to enforce the promise like a contract (called “promissory estoppel”). A plaintiff must show that a defendant made a promise that he or she reasonably relied on to the defendant’s detriment. If there is no evidence of the promise, however, a court will not enforce it.

Find Help with Disputes

When it comes to creating agreements, whether non-disclosure agreements or binding contracts, the line between casual promise and contractual offer can be difficult to determine. With this in mind, businesses need to take caution when making statements of intent to employees, partners, and others since even an innocent statement can be construed as a binding agreement. 

A contract may exist even when the parties involved do not intend for it to be so. In order to avoid unwanted legal obligations, heed our advice above. Though, in the situation that you’ve found yourself in hot waters… Circumstances call for assistance. To learn more about your business’s contracts or other legal issues, contact a local contracts attorney at Dowd Law to further your business resources and protect your assets.