Someone Broke a Verbal Agreement: Is It Enforceable? (Yes, Usually)

“We shook on it.” “He said he’d pay me half when the job was done.” “She agreed to sell me the car for $8,000 and then sold it to someone else.” And now the other person is saying: “There’s nothing in writing, so you can’t do anything.”

They’re wrong. And you don’t have to just sit there and take it.

Verbal contracts are real contracts

Under Australian law, a contract needs an offer, acceptance, consideration (something of value on each side) and an intention to be legally bound. None of those require a piece of paper. A verbal agreement, a phone call, a text exchange or a chat at the pub can all form a binding contract.

The problem isn’t enforceability. It’s proof. Without a signed document, you have to show what was agreed some other way.

The exceptions (what does need to be in writing)

• Sales of land and leases over a certain length (state legislation, e.g. the Conveyancing Act 1919 in New South Wales, requires writing)
• Guarantees of someone else’s debt, in most states
• Some consumer credit and insurance contracts

Almost everything else, including agreements to do work, sell goods, lend money, or share profits, can be verbal.

How to prove a verbal agreement

Courts and tribunals piece it together from:

• Text messages, emails and DMs referring to the deal, even indirectly
• Bank transfers (a deposit paid is strong evidence of agreement)
• Witnesses who were there or were told about it at the time
• Conduct: did work start? Were goods delivered? Did they accept something?
• Your own contemporaneous notes or diary entries

A single text saying “yep, $4,000 on completion, sounds good” is worth more than most people realise.

What you can claim

If they’ve breached, you can claim damages that put you in the position you’d have been in if they’d kept their word: the money you’re owed, the extra cost of getting the job done elsewhere, or the loss on a deal that fell through.

The Letter of Demand

A Letter of Demand sets out your version of the agreement in writing and forces them to respond. It should:

• State the agreement: who, what, when, for how much
• List the evidence you hold (messages, transfers, witnesses)
• Explain how they breached it
• State the amount you’re claiming and how it’s calculated
• Give a 14-day deadline before a small claims application

People who rely on “nothing in writing” are counting on you giving up. A formal letter listing their own text messages as evidence gives them a chance to fix it before you file.

Next step

In New South Wales a claim like this goes to the Local Court (Small Claims Division up to $20,000); NCAT hears only a consumer’s claim against a business that supplied them. Elsewhere, it goes to your state or territory’s civil tribunal or Magistrates Court, depending on the claim. They’re informal, cheap, and lawyers are usually not needed. Bring your evidence and your letter.

Claim Done drafts your Letter of Demand for $49. Done in about 5 minutes. You approve it before it is sent.