Why a Verbal Agreement Isn’t Always Enough
We’ve all been there — shaking hands on a deal, agreeing on something important, and walking away with the confidence that both sides will honour their word. It feels good to seal a promise with trust. But when it comes to business, property, employment, or financial matters, relying on a verbal agreement can be risky. While some verbal agreements are legally binding in Australia, proving what was said and agreed upon can be a whole different story.
In today’s world, where small misunderstandings can quickly become major disputes, having everything in writing isn’t just a formality — it’s protection.
The Problem with “Just Trusting Each Other”
A verbal agreement might seem straightforward in the moment. You discuss terms, both parties say “yes,” and you move forward. But what happens when memories fade, circumstances change, or one side conveniently forgets part of the deal?
Even if you and the other person have the best intentions, verbal agreements leave a lot of room for confusion. People interpret words differently, recall events differently, and sometimes remember only the parts that benefit them. Without clear evidence, it becomes one person’s word against another’s.
As any solicitor Burwood will tell you, disputes arising from handshake agreements are often some of the hardest to resolve because there’s no solid proof of what was promised. A written contract, on the other hand, provides clarity, legal weight, and peace of mind for everyone involved.
Are Verbal Agreements Legally Binding?
Here’s where things get a little tricky. In Australia, a verbal agreement can be legally binding if it meets the same requirements as a written contract — offer, acceptance, consideration (something of value exchanged), and intention to create legal relations.
However, the issue isn’t whether it’s binding; it’s whether you can prove it. Without written documentation, you may struggle to show the exact terms of the deal or even that an agreement was made at all.
For example:
- You agree to do freelance work for a client who promises to pay you $1,000.
- You complete the work, but they only pay $500.
- You claim they owe the full amount; they claim you agreed to a lower price.
Without emails, text messages, or written confirmation, it’s nearly impossible to prove your version of events in court.
When Verbal Agreements Don’t Hold Up
There are also specific situations where verbal agreements are not legally enforceable, regardless of what was said. These typically include:
- Real estate transactions – Buying, selling, or leasing property generally requires a written contract to be valid under Australian law.
- Guarantees – If someone agrees to cover another person’s debt, it must be in writing to be enforceable.
- Agreements lasting over a year – Long-term commitments usually need written evidence to be legally recognised.
- Complex business deals – Anything involving multiple parties, significant money, or detailed terms is too risky to leave unwritten.
In these cases, even if everyone verbally agrees, a court won’t uphold the arrangement without proper documentation.
The Risks of Relying on a Handshake
Verbal agreements can unravel for many reasons — not necessarily because of dishonesty, but because of human nature. Here are a few common scenarios that can lead to trouble:
- Misunderstanding the terms – What you meant by “delivery in two weeks” might mean “14 calendar days” to you, but “two working weeks” to someone else.
- Forgotten details – Over time, small but important parts of the deal — like payment methods or deadlines — can be forgotten.
- Changing circumstances – If something goes wrong, the other party might claim the terms changed or that no agreement existed.
- Lack of witnesses – If no one else was present, proving what was said becomes nearly impossible.
When disputes arise, the absence of written proof often means the case comes down to credibility — who the court believes more. That’s not a position anyone wants to be in when money, property, or reputation is on the line.
The Power of a Written Agreement
A written contract doesn’t just serve as evidence; it provides structure, clarity, and mutual understanding. It ensures that all parties know exactly what’s expected, what’s being exchanged, and what happens if things go wrong.
Key benefits of a written agreement include:
- Clarity – Everything is spelled out clearly, leaving little room for misinterpretation.
- Evidence – A signed document can be used in court if disputes arise.
- Protection – It outlines remedies if one party fails to meet their obligations.
- Accountability – People tend to take written agreements more seriously than verbal ones.
Even a simple written record — like an email confirming terms or a signed quote — can significantly strengthen your position.
Using Written Agreements in Everyday Life
Written agreements aren’t just for big business or legal transactions. They’re useful in everyday situations too.
- Freelance or contract work: Always have written confirmation of scope, deadlines, and payment terms.
- Borrowing or lending money: Even small loans between friends or family should have written terms to prevent misunderstandings.
- Selling personal items: A quick written record of price, condition, and delivery can prevent disputes later.
- Renting or subletting: Even informal living arrangements should have basic written agreements to protect both parties.
Taking a few minutes to document the details can save hours — or even thousands of dollars — in the future.
How to Protect Yourself in Verbal Arrangements
Sometimes, you may find yourself in situations where a full written contract isn’t practical or possible. In those cases, you can still take steps to protect yourself.
- Follow up in writing – After agreeing verbally, send a quick text or email confirming what was discussed. For example:
“Just confirming we agreed you’ll pay $500 for the garden work, to be completed by next Friday.” - Keep records – Save any messages, notes, or documents related to the agreement.
- Have witnesses – If possible, involve a neutral third party who can verify what was said.
- Get partial payment upfront – For work or services, a deposit shows commitment and provides evidence of a deal.
- Be specific – Avoid vague language. State clear terms like dates, prices, quantities, and responsibilities.
Even if the agreement remains mostly verbal, these small actions can make a big difference if issues arise.
When Things Go Wrong
If a verbal agreement breaks down, it’s important to act quickly and calmly. Start by gathering any evidence you have — emails, text messages, receipts, or bank transfers that indicate an agreement existed. Try to resolve the issue directly with the other party first. Many disputes can be settled through open communication.
If that fails, consider seeking mediation or legal advice. A solicitor can help you assess your options and determine whether it’s worth pursuing the matter in court. In some cases, even a letter from a lawyer can prompt the other party to fulfil their obligations.
The Value of Good Legal Advice
When money, property, or ongoing relationships are involved, getting professional advice before entering an agreement can save you from major headaches later. A solicitor can review or draft documents, explain your rights, and make sure your agreement complies with Australian law.
This doesn’t have to be expensive or time-consuming — in fact, the cost of good legal advice is almost always far less than the cost of a legal dispute. Think of it as an investment in security and clarity.
In an ideal world, everyone would honour their word, and verbal promises would be enough. But in reality, memory fades, situations change, and misunderstandings happen. Putting things in writing isn’t about distrust — it’s about being smart. Whether it’s a small favour, a major purchase, or a business deal, clear documentation protects everyone involved. A few minutes of paperwork today can save a world of stress tomorrow — and that’s a commitment worth making.
