Many people assume that if a deal is not in writing, it is worthless in law. That is not true. In the UK, verbal agreements – sometimes called oral contracts – can be legally binding in many situations.
This guide applies to business-to-business (B2B) agreements in England and Wales, not consumer contracts.
But the rules are not simple. Some contracts must be written to be enforceable. Others can be agreed verbally, but are much harder to prove in court.
This guide explains what verbal agreements are, when they are binding, when they are not, and how you can protect your business.
Are verbal agreements legally binding in the UK?
Yes – a verbal agreement can be legally binding if it meets the same basic requirements as a written contract:
- Offer – one business proposes the deal
- Acceptance – the other business agrees to the terms
- Consideration – something of value is exchanged (money, goods, services)
- Intention to create legal relations – both businesses intend for the deal to be enforceable
What if one party denies the agreement?
If there is no written record, you will need other evidence to prove it existed. This can be difficult and is often the main problem with relying on verbal agreements in a B2B context.
What is a verbal agreement under UK law?
A verbal agreement (or oral contract) is any contract made by spoken communication rather than in writing.
Verbal vs. Oral:
In law, they mean the same thing. “Verbal” simply means “words” – which can be spoken or written – but in common usage, it usually means spoken.
Handshake deals:
A handshake after agreeing on the terms in a meeting can still form a binding B2B contract, if the legal elements of offer, acceptance, consideration, and intention are all present.
Part verbal, part written:
Some commercial contracts are agreed partly by conversation and partly in writing. The written part can help evidence the verbal terms, but disputes may arise over anything not recorded.
When must a contract be in writing?
Certain business contracts must, by law, be written and signed. Examples include:
- The sale or transfer of land or property – This includes freehold or leasehold sales, assignments of leases, and certain licences over land.
- Certain regulated financial agreements – Some finance arrangements are regulated under the Consumer Credit Act 1974, even in a business context. These can include:
- Hire purchase agreements for business equipment or vehicles.
- Loans where one party provides credit and the other repays over time, including certain business loans to sole traders or partnerships.
- Leasing arrangements that operate like finance, where ownership passes at the end of the term.
Many purely commercial loans between companies fall outside these rules, but some will be caught if the borrower is a small business, partnership, or sole trader.
- Hire purchase agreements for business equipment or vehicles.
- Contracts of guarantee – Where one business promises to cover another’s debt or obligations if they fail to perform.
- Employment contracts – Employers must give employees a written statement of employment particulars on or before their first day of work (Employment Rights Act 1996, section 1). While this is not always the full contract, most employment terms are documented in writing to comply with the law and avoid disputes.
Even when the law does not require it, written contracts are safer and can save significant dispute costs later.
How to prove a verbal agreement exists
Without written terms, you need alternative evidence. This can include:
- Emails or text messages referring to the agreement
- WhatsApp messages showing the terms
- Notes taken at the time of the meeting or call
- Witness statements from employees or third parties
- Conduct showing both sides acted as if the contract existed
Example (B2B):
A logistics company verbally agrees to provide weekly pallet deliveries for a manufacturer at a set price. After the call, the manufacturer emails confirming the schedule, price, and starting date. The logistics company replies “All agreed” and begins deliveries. The manufacturer issues purchase orders and pays monthly invoices. If a dispute arises over pricing, the email exchange, purchase orders, invoices, and delivery records could all be strong evidence in court.
Is a text or email enough to make a contract?
Yes – if it contains all the essential terms and shows clear agreement, a binding B2B contract can be formed in writing via text or email.
Can I rely on WhatsApp messages?
Yes, provided they show clear agreement. But informal or shorthand language can create uncertainty in a dispute.
Can I record a conversation to prove a verbal agreement?
You may record a conversation you are part of without telling the other party, but it is not always advisable. In a commercial relationship, undisclosed recordings can damage trust and may not always be accepted as evidence without question.
Advantages and risks of verbal agreements
Advantages:
- Quick and easy to make
- Useful for routine, low-value B2B transactions
- No paperwork required at the time
Risks:
- Difficult to prove exact terms later
- Higher risk of misunderstanding between businesses
- Easier for one party to deny agreement or dispute scope of work
How to protect yourself if you rely on a verbal agreement
- Make a dated note of the agreed terms immediately after the conversation
- Follow up with an email confirming what was agreed
- Keep any related communications, including purchase orders and payment records
- Ask the other party to confirm by reply
If a dispute arises:
- Gather all evidence – emails, notes, invoices, bank records
- Seek early commercial legal advice
- Consider mediation or small claims procedures, depending on contract value
Turning a verbal agreement into a written one
Even after making a verbal agreement, you can put it into writing. This:
- Strengthens enforceability
- Reduces risk of disagreement
- Can be done quickly using a professional B2B template
PaperRock offers solicitor-drafted commercial contract templates you can adapt to your situation – giving you written proof without the cost of a bespoke lawyer.
