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<p>Contracts are at the heart of commercial law and underpin the foundations of our modern economy. Every transaction, whether between businesses, relating to  purchases of property or through the tap of a credit card, requires a valid contract. For these reasons, it’s vital that contracts are legally enforceable – an unenforceable contract can lead to confusion, a breakdown in trust, and significant financial and legal repercussions, one of the most crucial being that the transaction may be void.</p>
<h3>The long history of contract law</h3>
<p>Contract law in the UK can trace its roots back to lex mercatoria – merchant’s law – which was developed out of the practices of the mercantile trade networks in medieval Europe, but contracts have been around for much longer. One of the earliest examples of writing ever found – a Sumerian clay tablet from around 2,300 BC – is a sales and purchases contract written in cuneiform, and many historians argue that writing itself developed as a means to record financial agreements and transactions, as well as to keep accounts of livestock and commodities.</p>


<p><em>Above: a cuneiform clay tablet, similar to the world&#8217;s first known contract. ca. 546 BC. Source: Cuneiform tablet: promissory note for silver, Egibi archive, The Metropolitan Museum.</em></p>
<p>Likewise, the law on contracts is very old, and has its origins in centuries-old common law tradition. Statutory legislation on contract law is generally passed to update contract law over time and respond to issues and changes in the commercial industry. For example, the <a href="https://www.legislation.gov.uk/ukpga/1977/50">Unfair Contract Terms Act 1977</a> was introduced to help protect businesses and consumers from excessively one-sided contract terms, codifying fairness principles that had previously relied on the discretion of the courts.</p>
<h3>What constitutes a contract in UK law?</h3>
<p>In UK law, a contract is an agreement between two or more parties that creates enforceable rights and obligations. To be legally binding (enforceable by law), a contract must include specific key elements, including:</p>
<ul>
<li>Offer</li>
<li>Acceptance</li>
<li>Consideration</li>
<li>Intention</li>
<li>Capacity, and</li>
<li>Legality</li>
</ul>
<p>For more information on these required elements, see our article on <a href="https://linnearcms.wpenginepowered.com/resources/six-key-elements-legally-enforceable-contract/" target="_blank" rel="noopener">the six key elements of an enforceable contract</a>.</p>
<h3>Can a contract be verbal?</h3>
<p>Not all contracts need to be in writing. A verbal agreement can also constitute a contract, and a contract can also be made by conduct or acts of the parties to the contract. However, this is provided that certain key criteria are met.</p>
<p>Generally, it is best practice for a contract to be in writing. Verbal contracts can be inherently problematic because they rely on the memory and interpretation of the parties involved. Without a written record, disputes are more likely to arise over the specific terms agreed upon, or even over whether a contract was formed at all. This is why most commercial contracts are in writing, so that a record of the agreement is kept.</p>
<p>Written contracts do not necessarily need to be signed to be legally enforceable. Again, it is best practice to request signatures – a signature helps prove an agreement – but the lack of a signature does not necessarily mean a contract is not accepted and binding.</p>
<h3>What makes a verbal agreement legally binding?</h3>
<p>Verbal agreements can be legally binding under UK law provided they contain all necessary contract elements: offer, acceptance, consideration, intention, capacity and legality.</p>
<p>However, verbal agreements pose significant risks due to difficulties in proving the existence and specifics of the agreement if disputes arise. As a result, we would recommend that a written contract be used to safeguard a business’s interests and facilitate evidence of contractual terms.</p>
<h3>Common myths and misconceptions about contracts</h3>
<p>Contrary to popular belief, some elements commonly presumed essential are not legally required for contract validity. There are also widely held beliefs about contracts that don’t stand up to scrutiny. Some misconceptions about contracts include the following:</p>
<ul>
<li><em>‘A contract must be in writing’</em>: as mentioned above, a contract does not need to be in writing to be legally binding – many legally binding contracts are verbal contracts</li>
<li><em>‘A contract needs a witness signature’</em>: witness signatures are not generally required to make a contract legally binding (with the exception of certain documents, like deeds)</li>
<li><em>‘They signed the contract – they know what they agreed to</em>’: a contract, even if accepted, may be unenforceable if it contains terms considered unfair or unlawful</li>
<li><em>‘You can hide terms in the small print</em>’: similar to the above, if something important has been made difficult for the reader to notice, the contract’s terms may be unfair and unenforceable</li>
</ul>
<h3>Contracts that have to be in writing</h3>
<p>Despite the general rule that contracts do not need to be in writing to be legally enforceable, UK law specifies several exceptions where contracts must be in writing to be legally binding, including:</p>
<ul>
<li>Assignments</li>
<li>Contracts for the sale of land</li>
<li>Equitable mortgages</li>
<li>Assents (documents passing property from executors to beneficiaries)</li>
<li>Transfers of shares</li>
<li>Transfers of intellectual property rights</li>
<li>Guarantees</li>
</ul>
<p>In any event, written contracts are almost always preferable, as they can offer clarity to all parties and minimise any risks of misunderstandings and legal disputes.</p>
<h3>Get help with drafting a legally binding contract</h3>
<p>Ensuring a contract is legally binding requires careful drafting, attention to detail and expert knowledge of UK law. At Linnear Legal, our experienced <a href="https://linnearcms.wpenginepowered.com/commercial/">commercial lawyers</a> specialise in creating robust, legally compliant contracts tailored to your business needs.</p>
<p>Whether you are drafting new agreements or reviewing existing contracts, professional legal support can protect your business interests and provide peace of mind. <a href="https://linnearcms.wpenginepowered.com/get-in-touch/">Contact Linnear Legal today</a> to ensure your contracts safeguard your rights and withstand legal scrutiny.</p>


Written vs verbal contracts: myth-busting UK contract law

Verbal contracts can be legally binding in the UK, but they carry risks. Discover common myths and when a written agreement is legally required.

Written vs verbal contracts: myth-busting UK contract law | Linnear Legal

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