Are Verbal Contracts Legally Binding in Canada

Verbal contracts are agreements made through spoken communication rather than through written form. These types of contracts can be made in a variety of situations such as business deals, personal agreements, or even employment arrangements. However, one question that often arises is: are verbal contracts legally binding in Canada?

The short answer is yes, verbal contracts are legally binding in Canada. According to the law, a verbal agreement is just as enforceable as a written agreement as long as it meets certain criteria. The main requirement is that both parties must agree on the terms of the contract, and there must be consideration – or something of value – exchanged between them.

In other words, if you and your friend agree that they will fix your car in exchange for you cooking them dinner, and both parties follow through on their end of the deal, then that verbal agreement can be legally binding.

However, there are some limitations to verbal contracts. Certain types of agreements, such as contracts for the sale of land or contracts that cannot be completed within one year, are required to be in writing to be enforceable under Canadian law. This is because these types of contracts are too important to rely on a fleeting verbal agreement that may be easily forgotten or disputed later on.

Another limitation is the difficulty in proving the existence and terms of a verbal contract. Unlike a written contract, there is no physical document or signature to prove the agreement exists. This can make it difficult to enforce the terms of the agreement if one party decides to break it or dispute its terms. In these cases, it may be necessary to rely on witness testimony or other evidence to prove the existence and terms of the verbal agreement.

In summary, verbal contracts are legally binding in Canada as long as both parties agree on the terms and there is consideration exchanged. However, it is important to note that certain types of agreements, such as contracts for the sale of land, are required to be in writing to be enforceable, and proving the existence and terms of a verbal agreement can be challenging. As such, it is generally advisable to put important agreements in writing to avoid any potential disputes or legal issues down the road.