A verbal contract is valued as much as the paper it is written on. While

discussing and preparing for an important case, I found myself thinking

the legalities of verbal contracts and the misconception towards their

unenforceability.

Technically, in this part and other parts

of the world, verbal contracts are binding and enforceable. As any

contract requires an offer, acceptance and consideration and does not

necessarily requires a piece of paper on which the arrangement shall be

detailed out. This article will focus on how UAE laws interpret verbal

contracts and how they are binding on the parties.

What are Verbal Contracts?

Often, verbal contracts are referred to as oral arrangements meaning

unwritten contracts. Although such contracts are equally valid as that

of written contracts, one may face complications proving the veracity of

such contract and a considerable breach by the opposite party. Some

outlining facts about verbal contracts are as follows:

consideration upon your acceptance, you are legally bound to pay post

receiving the service.

if there is a dispute pertaining to the breach of contractual

obligations.

Enforceability

One of the key complications of verbal arrangement is its

enforceability. The courts though will be able to draw the fundamental

provisions of the contract in order to enforce it, yet it may be

difficult if the case is about he said that and she said that. Parties

may disagree with the content of the contract, and thus, it is easier to

evaluate the true intention of the parties if the agreement is written,

as simple as that.

In UAE Law, prima facie, verbal contracts are binding and

enforceable, and the magnitude of enforceability relies on the intention

and actions of the parties which assist in determining the veracity of

the contract. The law states that any action or reaction which shows

that there existed a mutual consent to do a particular act demonstrate

their intention to contract.

History of the transaction between parties plays a crucial role in

determining their intent and is strong evidence to evaluate the terms of

an existing verbal contract. In the absence of the foregoing, rules of

UAE customs apply which is otherwise not present in Commercial or Civil

code. Importantly, the Civil Code of UAE focuses on the duty of good

faith and bona fide intentions, which as a results helps on examining

the conduct of parties.

In the event of dissension between the parties in accordance with a

verbal contract, the court will decide the case on merits, nature of the

transactions and relevant provisions of the Civil Law. The law

explicitly highlights that a contract should include an agreement on all

the terms and not on some of them. The court shall most certainly

determine the extent of the performance of the contract and if or not

there is any consideration paid by either party. The Commercial Law of

UAE stipulates numerous provisions in relation to contractual

obligations of parties which shall be taken into consideration if the

contract is silent on such issues or there is no express agreement on

the concerned matter.

Leave no space for Dubiety!

Albeit, UAE Law consider and enforce verbal contracts, it is usually

prudent to draft the contractual terms in writing to avoid unnecessary

conflicts and disputes. A written agreement makes life easier for the

parties and for the court to make justice to the victim.