What is a Written or Oral Agreement in Contract Negotiations Called?

When it comes to contract negotiations, the terms 'written agreement' and 'oral agreement' are straight-forward English terms that mean exactly what they say. A written agreement is a document that is set down in ink or digital form. On the other hand, an oral agreement is a verbal promise between parties. While some individuals may attempt to sound more sophisticated by complicating these definitions, the actual meaning remains clear and simple.

No Need for Jargon in Formal Agreements

In the legal world, particularly in contract law, the use of legal jargon is often necessary to ensure that there is a clear and enforceable agreement. An oral agreement, sometimes referred to as a "promise to do something," lacks the formal language and documentation that a written contract provides, making it harder to enforce should a dispute arise.

The Role of Formalization in Contracts

In order for a contract to be considered legally binding, a substantial agreement needs to be reached, and this is often facilitated through a written document. However, an oral agreement can also be substantial and legally binding, especially if it describes the terms of the agreement accurately and leaves no room for ambiguity. The primary distinction lies in the enforceability and ease of reference in a written document.

Not all agreements are finalized during negotiations. Until the negotiations conclude and the terms are agreed upon, no agreement is legally enforceable, whether it is oral or written. Once the final terms are agreed upon, a written agreement is typically better documented in a formal contract, while an oral agreement may need to be supplemented with additional terms and conditions to form a legally binding contract.

Elements of a Contract

The process of reaching an agreement during negotiations involves several key steps. An offer is made, and if the other party accepts, it is followed by the meeting of the minds, which signifies the formation of a legally binding agreement. At this point, an agreement is formed, but if it is to be legally enforced, it may need to be recorded in a written contract.

So, what is this agreement called? It can be called by several names depending on its final status. Until the terms are agreed upon, it might be referred to as a “tentative agreement”. Once the terms are finalized, whether in an oral or written form, it is then called a “contract.”

Conclusion

In the context of contract negotiations, the terms 'oral agreement' and 'written agreement' are fundamental concepts that every individual, whether a layperson or a legal professional, should understand. While oral agreements can be legally binding, a written contract provides the necessary documentation to enforce the terms effectively. Whether your agreement is negotiated orally or written down, ensure that the terms are clear, and ideally formalize the agreement in a written document to provide clarity and protection for all parties involved.