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Oral promises as implied contracts

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Updated: 4/13/2007 6:36 pm
Some employers wrongly assume that employment contracts made orally aren't legally binding. Written contracts, are, of course, more preferable because they create a record of what was agreed and thus help to prevent misunderstandings and arguments. However, if the basic elements of a contract are present, meaning an offer is made and accepted, an oral agreement is just as valid and enforceable as a written one. For example, if a company verbally promises an employee a job for life as an incentive to working with the company, the employee can sue for breach of contract if he or she is laid off in the future. Though oral contracts are harder to prove, they have and can be held up in court, especially if the employer's promises are specific enough to affect an employee's employment decision. Unfortunately, there are no set guidelines for determining when an employer's words create a contract. Courts usually decide such matters on a case-by-case basis and base their decision on factors such as the length of employment, whether other employees were assured the same employment terms, and whether the assurance of those terms affected the employee's decision to join the company. If the court determines that an oral employment agreement is an implied contract, it can order the employer to enforce the contract. Generally, the best way companies can reduce liability from oral promises is to create written employment agreements that negate oral promises that aren't guaranteed.
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