Validity of An Oral Agreement
An oral agreement is as equally valid, as a written one. The legality, of an oral agreement, cannot be questioned, if it falls under the ambit of the requirements stated in section 10 of the Indian Contract Act, 1872.
This was substantiated by the Delhi High Court, in the case of Nanak Builders and Investors Pvt. Ltd. vs. Vinod Kumar Alag AIR 1991 Delhi 315, whereby the Court held that even an oral agreement can be a valid and enforceable contract. Therefore, in the strict sense, it is not essential that a contract must be in writing, unless specified by law or the parties themselves contemplate the reduction of terms of agreement to writing.
The same was reiterated by the Supreme Court in the case of Alka Bose vs. Parmatma Devi & Ors [CIVIL APPEAL NO(s). 6197 OF 2000], whereby the Court held that even a sale agreement can be oral and have the same binding value and enforceability, as a written agreement. The agreement should be in tandem with the essentials listed in section 10 of the Indian Contract Act, 1872 and thus, will have the equal force of evidentiary value, as a written one.
Admissibility of Oral Agreement as Evidence
As per the Act of 1872, a valid oral agreement is of value and can be enforced in the court of law. However, it is always difficult to prove the existence or the exact terms of the agreement, in case of dispute.
Furthermore, Section 48 of the Registration Act, 1908, states that all non-testamentary documents duly registered under this Act, and relating to any property, whether movable or immovable, shall take effect against any order, agreement or declaration relating to such property, unless where the agreement or declaration has been accompanied or followed by delivery of possession.
Also, Section 92 of the Indian Evidence Act states that when the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms. However, its proviso (2) makes an exception to that if there is any separate oral agreement as to any matter where the document is silent and the terms are inconsistent, then the oral agreement may be proved valid. And proviso (3) further makes an exception that if there is any separate oral agreement which constitutes a condition precedent to the attaching of any obligation under any such contract, then also oral agreement may be proved.
In the case of S.V. Narayanaswamy vs. Savithramma 2013R.F.A. No. 1163 of 2002 c/w R.F.A.No.1164 of 2002 Karnataka High Court, the Appellant sought to prove the existence of a oral agreement, which was vehemently claimed to exist, with respect to sale of property. With the onus to prove being on the Appellant, it did so, by producing cheques of several amounts, towards the entire consideration of the property. By producing various pieces of evidence, which indicated towards a whole, the court upheld the existence of the oral agreement, based on the scrutiny of the evidence provided.
Thus, oral agreements, although may sound like a bag of quagmire, can be proved in a court of law, through several circumstantial evidence. Even with several witnesses to prove the existence of an agreement, the court is often taken to task to prove and ascertain the terms and conditions of the oral agreements. It is highly likely that personal bias and the parties not being completely ad idem, would affect the validity and question the existence of a valid oral agreement.
Source :- https://www.mondaq.com/india/contracts-and-commercial-law/768278/enforceability-of-oral-agreement-in