I was talking to a colleague the other day. I said that someone had an oral agreement to do something. She corrected me and told me that I shouldn’t have said oral. Verbal was the preferable word. I politely told her she was wrong, and she politely told me that I was wrong. We did this several times, and left the discussion agreeing to differ. She probably forgot about the discussion while I resolved to find evidence to prove her wrong.

If you look hard enough, you will probably find my position is correct. Strictly speaking, verbal means in words, and oral means spoken. The origin of verbal is from the Latin verbum, which means word. Oral is derived from another Latin word (os/oris), the word for mouth. That is why we call contraceptives ingested through the mouth oral contraceptives. I suspect that a verbal contraceptive would have a very high failure rate.

But the argument of origin isn’t really a very strong one. You could use the same argument to say that you can’t arrive anywhere unless a river or a shore is involved! Words do change in meaning over the course of time, and we need to accept those changes. After all, people have used (or misused!) verbal for so long that you could say that it’s about time that we, pedants, got over it. Nice is derived from the Latin, nescius, meaning ignorant. But nobody would seriously argue that the present meaning is incorrect.

This, of course, disregards a much stronger argument. When change creates ambiguity, we should all care and hang on to the original meaning a little longer. Perhaps to avoid ambiguity, lawyers tend to talk about oral contracts rather than verbal contracts, preserving the traditionally correct term.

An oral contract is a contract that involves spoken words. Contrary to popular opinion, an oral contract is enforceable. Although certain contracts (such as real estate) have to be in writing, other oral contracts are enforceable. When Getty Oil was sold to Texaco, Pennzoil sued because a deal had already been made with them based on a handshake. They claimed that an oral contract had been made and won about $10 billion in damages. Of course, people should be careful with oral contracts. It is often more difficult to enforce because witnesses are sometimes hard to find or are unreliable. And, as they often say, the devil is so often in the details. For example, I make a deal with someone to paint my house tomorrow. He agrees to do it for $3,000. With an offer, acceptance, and consideration in place, we have all the ingredients needed for an enforceable contract. But so many things can go wrong with an oral contract! Does that include the paint? Are we talking about the whole house or just the interior walls? How about the doors and the window frames? The list goes on and a simple agreement could wind up becoming a legal nightmare unless these details are expressed in writing.

People responsible for interviewing candidates for a job need to be especially careful because casual statements made during the hiring process may lead to commitments that may be hard to live with and might be construed as oral contracts.

For example:

  • During an interview, a candidate asks how stable employment is at a company. The interviewer laughs and says, “We’ve never had any layoffs. You’d have to commit a crime to get fired around here!”
  • Describing the nature of the position, the interviewer says, “We are talking about a full-time, permanent position.”
  • A candidate asks when she can expect a salary increase. “We give raises every year after you get your performance review.”

Some lawyers even advise not talking about salaries on an annual basis because that could be construed as a commitment to keep someone for a year.

These risks can usually be managed by asking a prospective employee to sign a written agreement that nothing can be construed to affect the “at will” nature of the employment. This might include a statement in the offer letter that might be something like this:

“As you may know, all employment at this company is ‘at will.’ This means that either party, you or the company, is free to end the employment relationship at any time for any reason.”

Employee handbooks should also contain language reminding the employee that the handbook is intended to provide information without binding or committing the employer in any way.

Some contracts are not explicitly spoken or written. For example, you walk into a bar, and the person behind the bar says, “What can I offer you?” You order a glass of champagne. After several glasses of champagne, you get the bill. You refuse to pay on the grounds that the barman specifically offered you a drink with no discussion of prices. You argue that there was no offer and acceptance. Indeed you were surprised by his generosity and his apparent willingness to serve you the best champagne! Your argument would definitely be thrown out of court because you entered into an implied contract when you ordered your glass of champagne. The bar can be held accountable for serving you your drink with reasonable care and skill and in a reasonable time. But you are contractually obliged to pay for it.

 

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