No oral agreements: Overview, definition, and example
What are "no oral agreements"?
"No oral agreements" refers to a clause in a contract that explicitly states that any amendments, modifications, or understandings related to the agreement must be in writing and signed by both parties. This clause prevents any oral, informal, or verbal agreements from being considered legally binding, ensuring that all terms and conditions of the contract are clear, enforceable, and documented. Essentially, it means that any changes to the contract or new terms must be made in writing and cannot be agreed upon or modified by spoken communication alone.
For example, if two parties are negotiating a business deal, a "no oral agreements" clause would require that any changes to the deal’s terms be written down and signed, even if both parties verbally agree to the change.
Why are "no oral agreements" important?
The "no oral agreements" clause is important because it provides legal clarity and reduces the risk of misunderstandings. Oral agreements can be difficult to prove in court, as they rely on memory or witness testimony, which can be unreliable. By requiring any changes or amendments to be in writing, the clause ensures that both parties have a clear and mutual understanding of the agreement, including any modifications.
For businesses, having a "no oral agreements" clause helps maintain consistency and prevents one party from later claiming that a verbal agreement was made that contradicts the written terms. For individuals, it ensures that any important discussions or changes to the agreement are formally documented, protecting their interests.
Understanding "no oral agreements" through an example
Imagine a software company enters into a licensing agreement with a client. The contract contains a "no oral agreements" clause that stipulates any updates to the terms must be made in writing. Later, the client and the company have a discussion about expanding the service but only agree verbally on the new terms. Since the contract includes the "no oral agreements" clause, the verbal agreement has no legal effect, and both parties must formalize the new terms in writing for them to be enforceable.
In another example, a landlord and tenant enter into a lease agreement with a "no oral agreements" clause. If the tenant asks for an extension of the lease verbally, the landlord can reject the request unless the tenant submits a written request and both parties agree to a written modification of the lease terms.
Example of a no oral agreements clause
Here’s how a "no oral agreements" clause might appear in a contract:
"This Agreement, including any amendments or modifications, shall be effective only if in writing and signed by both Parties. No oral agreements, understandings, or modifications shall be valid or enforceable under this Agreement."
Conclusion
A "no oral agreements" clause ensures that all terms, amendments, and modifications to a contract are documented in writing, preventing disputes based on verbal agreements that are difficult to prove. It provides clarity and legal certainty, protecting both parties by requiring formal documentation of any changes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.