Hilary Muza 
IN last week’s article, I looked at the circumstances under which a contract might be deemed voidable. In this week’s article, I continue that conversation and expand it by dealing with how you can prove the existence and terms of a verbal contract.
Thirdly, a contract can be voided on the basis of mistake. A mistake in contract law is when one or both parties have a false belief about a contract. A mistake might be a misunderstanding about terms, laws, or information relevant to the contract.
If a party can prove their false belief has legitimate grounds, the contract would become void. A court may also rule that a new contract is negotiated through mutual assent or reparations are made for the mistake, depending on the nature of the mistake.
What of verbal contracts?
In the case of Delta Beverages (Private) Limited v Pyvate Investments (Private) Limited and Another, verbal contracts were held to be enforceable and are seen to give rise to valid contractual relationships.
An exception to this rule, is if it is required by law that an agreement be in writing in order to be deemed as valid, examples include an agreement for the sale of land, mining leases and other related contracts. In terms of the Consumer Protection Act [Chapter 14:44], the minister of Industry and Commerce may prescribe categories of consumer agreements that are required to be in writing.
A court will endorse a verbal agreement as valid if all the essential elements of a contract exist. The essential elements of a verbal contract are the same as those of a written contract. As such, it must be clear to the court that both parties intended to contract and there was a meeting of the minds of the parties or a reasonable belief that there was consensus to contract.
Risks of verbal contracts
Although this may seem to be an easier, cheaper, and less time-consuming option, there are a few risks that a business may encounter when entering verbal contracts. There is no proof of the terms and conditions of the agreement. This may lead to a misunderstanding or a non-fulfilment of obligations, which may breach upon the rights of the other contracting party.
Disputes may easily occur as the parties may have different opinions on what was agreed to. This may lead to expensive litigation proceedings. Having a readily available written contract reduces the chances of having costly and time-consuming litigation. If there is not enough evidence to prove the existence of the contract, a court of law may refuse to enforce the terms of the verbal contract.
Breach of confidentiality by a contracting party may easily occur, as there is no formal document which sets out the confidential and non-disclosure provisions protecting sensitive information.
The higher the value of the transaction not agreed to in writing, the greater the risk to the business of not having a clear written agreement setting out the terms and conditions of the arrangement, especially if the business is incurring costs in terms of the agreement, for example, the costs of supplying a customer.
Part verbal, part written contracts
Some agreements may be only partly verbal. For example, there may be supporting paperwork such as a quote or a list of specifications that also forms part of the contract.
At the very least, parties should write down the main points that are agreed upon to avoid relying on memory. Any paperwork associated with the contract must be kept and recorded.
This paperwork can later be used in discussions to try to resolve a problem. If the dispute becomes serious, it may be used as evidence in court. The most important thing is that each party clearly understands what work will be done, when it will be completed and how much will be paid for the work.
How to prove a verbal contract
In the Delta Beverages case, it was held that the party who alleges the existence of an oral contract bares the onus to prove its existence. A verbal contract can be proved using evidence showing correspondence between the parties or evidence of the performance of the contract. This may include emails or any other written correspondence, transactional statements, notes made at the time of the agreement, supplies and or specifications and witnesses. The evidence will need to show the intention of the parties and the dealings between the parties after the alleged contract was concluded. Verbal contracts are usual quite difficult to prove due to lack of tangible evidence.
This can often lead to “he said, she said” scenarios, which will not be upheld by a court of law.
I will conclude by showing you what is required to prove a verbal contract. The following documents are key:
– E-mails
– Quotes with relevant details
– Lists of specifications and materials
– Notes about your discussions/ negotiations —for example, the basics of your contract written on the back of an envelope (whether signed by both of you or not).
If the contract is only partly written or the terms of the work are set out in a number of separate documents, it is to your benefit to make sure that any formal agreement you are being asked to sign refers to or incorporates those documents.
At the very least, make sure the contract does not contain a term to the effect that the formal document is the ‘entire agreement’.
Muza is a duly admitted lawyer with expertise in business law, labour law and commercial litigation. He writes in his personal capacity. For feedback, email him at hilarykmuza@gmail.com or call on +263719042628.
