Is a Verbal Agreement Legally Binding in Australia?

You shook on it. Or agreed over the phone, or across a kitchen table. Nothing was signed, and now the other person is saying they never agreed to that, or remembers it very differently. Does a deal that was only ever spoken count for anything?

In Australia, usually yes. A verbal agreement can be just as binding as a written one. The hard part is not whether it counts. It is proving what was said. This guide covers when a spoken agreement is enforceable, the few that must be in writing, what works as evidence, and how to put a verbal deal on paper after the fact.

This article is general information, not legal advice. For a large or disputed agreement, consider speaking with a lawyer.

The Short Answer

Australian contract law does not generally require writing or a signature. If two people reach a clear agreement, each gives or promises something of value, and both intend it to be binding, a contract exists whether the words were typed, written or spoken. Our guide to what makes a contract legal in Australia walks through those elements in detail.

Agreements That Must Be in Writing

There are exceptions. Some agreements are unenforceable, or breach the law, unless they are written down. The main ones are:

• Sales and other dealings in land, including buying a house and most long leases
• Consumer credit contracts offered by lenders, under the National Credit Code
• Guarantees of another person's debt, in several states and territories
• Transfers of copyright, which must be in writing and signed by the owner
• Home building and renovation work above a set value, which state laws require to be in a written contract
• Wills, and some other formal documents such as deeds

Residential tenancies are a slightly different case. Landlords are generally required to provide a written agreement, but a tenancy that was only agreed verbally is usually still covered by your state's tenancy laws.

Why Verbal Agreements Fall Apart

Most disputes over spoken agreements are not about lying. They are about two honest people remembering different things. Three problems come up again and again:

• No one can show the terms. Was it $2,000 or $2,500? Due in March, or "when things pick up"?
• The details were never discussed. A handshake covers the headline and nothing else: what happens if the work runs late, or one person wants out
• Intention is unclear. Between friends and family, the other side can argue it was a favour, a gift or a loose plan rather than a binding deal

The person claiming an agreement exists is the one who has to prove it. A tribunal decides on the balance of probabilities, which means it asks whose version is more likely, based on whatever evidence each side can produce.

What Counts as Evidence of a Verbal Agreement

You rarely have nothing. Even where no contract was signed, there is usually a trail around the conversation:

• Texts, emails and chat messages before or after the conversation that mention the deal, the price or a date
• Bank transfers, especially with a description, and any part payments
• Invoices, quotes or receipts that match what you say was agreed
• What each person actually did. Starting the work, moving in, handing over the car, or making repayments all show there was an arrangement
• Witnesses who were present or were told about the deal at the time
• Your own notes made on the day, which carry more weight than a recollection months later

How to Fix a Verbal Agreement After the Fact

If you already have a spoken deal in place, you can still put it on record, and the sooner the better.

1. Send a confirmation message

The same day if you can, send a short email or text: "Just confirming what we agreed today: I'll build the deck for $4,800, half up front and half on completion, finished by the 30th. Let me know if I've got anything wrong." A reply of "yep, all good" turns a conversation into written evidence. Even no reply helps, because it shows what you understood at the time and that they did not object.

2. Turn it into a short written agreement

For anything that will run for more than a few weeks or involves real money, write the terms down properly and have both people sign. An agreement signed after the arrangement began is still valid, and it replaces memory with a document. An electronic signature is legally valid for almost all everyday agreements, so nobody has to meet in person.

3. Keep everything

Save the messages, screenshots and bank records now, while they are easy to find. Phones get replaced and chat histories disappear.

Where This Comes Up Most

• Lending money to friends or family. See what to do when a friend won't pay back a loan, or set up a private loan agreement before the money moves
• Freelance and trade work. A job agreed by phone is the classic unpaid-invoice dispute. See what to do when a client won't pay your invoice
• Share houses. Rent splits, bills and notice agreed in conversation are the root of most flatmate disputes, which is what a housemate agreement is for

How Long Can You Enforce a Verbal Agreement?

The time limit is generally the same as for a written contract: six years from the breach in most of Australia, and three years in the Northern Territory. In practice a verbal agreement gets harder to prove every month, as messages are lost and memories fade, so do not wait.

Sources: business.gov.au, Australian Competition and Consumer Commission, National Consumer Credit Protection Act 2009 (Cth), Copyright Act 1968 (Cth) s 196.

Frequently Asked Questions

Is a handshake deal legally binding in Australia?

It can be. A handshake is simply a sign that two people have agreed. If the agreement behind it is clear, involves something of value passing each way, and both people meant it to be binding, it is a contract. The handshake itself proves very little, so the surrounding evidence matters.

Are text messages enough to prove an agreement?

Often, yes. Messages that set out the deal, or that confirm it afterwards, are regularly accepted as evidence by tribunals and courts. A clear exchange of messages can even form the contract itself.

Is a verbal agreement between family members binding?

It can be, but intention is examined more closely. With family and close friends it is easier for the other side to argue the arrangement was informal help rather than a binding deal. Evidence that both people treated it seriously, such as agreed repayment dates or regular payments, makes a real difference.

Can I take someone to a tribunal over a verbal agreement?

Yes. Small claims tribunals and courts deal with unwritten agreements all the time. You will need to show what was agreed and how it was broken, using messages, payments, witnesses and conduct. A letter of demand is the usual first step. See our state-by-state small claims guide for the process where you live.

Can a written contract be changed verbally?

Sometimes, but it is risky. Many written contracts say that changes must be in writing and signed, and even where they don't, a spoken change is as hard to prove as any other verbal agreement. Confirm every change in writing.

Can I back out of a verbal agreement?

Not simply because it was never written down. If a binding agreement was reached, walking away from it is a breach in the same way as breaking a written contract, unless the other person agrees to release you or the agreement is one that the law requires to be in writing.