Good Morning

“I only have a verbal agreement, and they are denying the debt, please help me.”

Unfortunately, I have had this plea for assistance all too often.

It is very common when money is loaned to a very close friend or child that it is done on the basis of a verbal agreement, which commonly only known between the lender and borrower. At the time both parties act in good faith but due to circumstances that arise due a breakdown in relationship or financial difficulties, the borrower denies the agreement entirely or says that it was given as a gift and is not repayable.

Whilst an aural agreement can be enforced, there may be difficulties in establishing the agreement to the satisfaction of the court. When you go to court you can never be sure of the outcome or how the case will proceed leading to legal costs, emotional costs and time costs in running your case. To establish the agreement, you must satisfy the court that it meets the core legal requirements as follows:

1. There must be a clear promise or proposal (“the offer”);

2. The other party must unequivocally accept that offer (“the acceptance”);

3. There must be an exchange of value (such as money, services or a promise “the consideration”);

4. The parties must intend the agreement to be legally binding; and

5. The terms of the agreement must be plain and clear.

The court requires physical evidence. Physical evidence that I have used to assist my clients include the following:

1. The conduct of the parties;

2. Bank records;

3. Emails and messages using an electronic application such as Outlook, Messages, Mail, Facebook, SMS, WeChat, WhatsApp;

4. Witness statements;

5. Invoices or payments;

6. Telephone records; and

7. Diary notes

Without such evidence it becomes is it just one person’s word against another and a battle to convince the court regarding your credibility over the other’s.

I always recommend a deed of agreement including interest and a final repayment date. A lender is always at liberty to forgive interest and extend the length of a loan. This is especially important when lending money to children, to assist them to purchase property. Unfortunately, longevity of marriages is not what it used to be and when a marriage breakup occurs, emotion and anger often override reason and common-sense. Verbal agreements are forgotten and recalled as gifts.

Challenging such assertions requires the production of physical evidence to support that the money provided was a loan, not a gift. Such forensic searching for the required evidence, often results in significant legal costs which could have easily been avoided. I have been successful in representing my clients both in the family and civil courts to establish the verbal contract by assisting them to produce the collaborating evidence as required by the courts.

If either you or someone you know is thinking of lending to a close friend or relative, or needs to recover money lent on the basis of a verbal agreement, please contact me.

Wishing you a wonderful day,

Jeffrey Choy

JCL Legal

0419 233 670

[email protected]

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Legal Disclaimer : This guide is for informational purposes only and does not constitute legal advice.