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Provided that an oral contract satisfies any requirements imposed by law, such a requirement that contracts for a specific type of transaction be in writing, it is legally enforceable. [1] [2] For example, in 1984, Getty Oil was sold to Pennzoil in a handshake deal, a lay term for an oral contract, which was binding under New York law.
The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law. The law governing transactions involving the sale of goods has become highly standardized nationwide through widespread adoption of the Uniform Commercial Code .
If the contract is not required by law to be written, an oral contract is generally valid and legally binding. [58] The United Kingdom has since replaced the original Statute of Frauds, but written contracts are still required for various circumstances such as land (through the Law of Property Act 1925).
The CISG allows for a sale to be oral or unsigned, [29] but in some countries, contracts are not valid unless written. In many nations, however, oral contracts are accepted, and those States had no objection to signing, so States with a strict written requirement exercised their ability to exclude those articles relating to oral contracts ...
A contract of employment requires no form to be effective, however an employee has a right under the Employment Rights Act 1996 section 1 to receive written particulars stating the contract from the employer. This may not in fact be the contract, which a court can construe from all the circumstances, but will be strong evidence of it.
A contract is a legally binding agreement. Once an offer has been accepted, there is an agreement, but not necessarily a contract. The element that converts any agreement into a true contract is "intention to create legal relations". There must be evidence that the parties intended the agreement to be subject to the law of contract.
A legally binding contract is defined as an exchange of promises or an agreement between parties that the law will enforce, and there is an underlying presumption for commercial agreements that parties intend to be legally bound (Contracts 2007). In order to be a legally binding contract, most contracts must contain two elements:
Loan agreements are usually in written form, but there is no legal reason why a loan agreement cannot be a purely oral contract (although oral agreements [4] are more difficult to enforce). Types [ edit ]