Premier Business Law Firm | Hillside, IL

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Verbal Agreements: Do They Hold Up?

Verbal Agreements have never been more pertinent to be read up on as powerful agreements are being made globally by individuals and corporations alike with word of mouth.  

Sometimes there is lacking clarity about the liability when an individual as a part of a company enters into a verbal agreement - especially when it is not vocally specified who is bearing responsibility. The last thing you want or need is to be in a contract that binds you to something but you thought you were agreeing to something else.

Confusion in this area can leave individuals susceptible to major liability for huge sums of money and someone has to be responsible. 

How is it determined?

It’s going to largely depend on the judge you get to oversee your case and how your attorney approaches the dilemma. 

For example, if John Smith, the CEO of PuppyCorp decided to enter into a verbal agreement with Dave Jones the CEO of Dog Bowls Inc. for trade, dual distribution or any number of ties.

The CEO of PuppyCorp (John Smith) decides to start a new business venture and leaves the company. That means, John Smith, the one who made the agreement on behalf of PuppyCorp is no longer around to honor the agreement. Does that mean it's still the same agreement? Even if the CEO, or the agreeing individual is a new person in six months - the obligation falls on PuppyCorp to uphold that verbal agreement, not John Smith because it was made on behalf of PuppyCorp.

Sometimes disputes like this get taken to court because a company wants out of a verbal agreement someone made who is no longer with the organization.  In our cases, we always argue that the responsibility lies on the company as a whole - NOT the individual to uphold an agreement. This limits the liability of the individual.

Have you ever made a verbal agreement with another business? Most disputes have to do with lacking clarity so when making an agreement; make sure to clarify all pertinent bonds of the contract and specify liability.