Navigating Verbal Loan Agreements: Legal Advice for Enforcing Unwritten Debts

Good Morning

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

It is often the case between friends and family that money is loaned on a verbal agreement.

At the time both parties act in good faith but due to circumstances difficulties arise where a breakdown in a relationship or financial difficulties results in a person denying the agreement. I have had clients in this position both with family and friends.

To enforce a contract there are 4 main criteria:

1. Offer;
2. Acceptance;
3. Something of value (consideration); and
4. When repayment is due.

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 there is a requirement for physical evidence. Physical evidence that I have used to assist my clients includes the following:

1. Bank records;
2. Messages using electronic applications such as Facebook, SMS, WeChat, and WhatsApp;
3. Emails;
4. Telephone records; and 
5. 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. When money is loaned over a property, I recommend a loan deed and unregistered mortgage safeguarded by a caveat. Fortunately, many of my clients have followed my advice and have been able to recover their money, especially in the case of marriage breakdowns when arguments arise over whether a loan was a gift or not. 

I have successfully represented my clients both in the Family and civil courts to establish a verbal contract. I have also been able to settle many cases through a thorough forensic analysis to discover other corroborating evidence to bring the debtor to pay.

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

 Have a wonderful day,

Kind Regards,

Jeffrey

0419 233 670

[email protected]

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ps. I am available to discuss matters either in my office or by Zoom conference; and 

provide notary services which must be in person.