Order of Precedence
Contract Type:
Generic Contract
Jurisdiction:
No oral disclosure, representation, promise, or warranty shall be binding on either party unless subsequently reduced to writing and signed by an authorised representative of the party to be bound.
Explanation
Here is a plain English explanation of the Oral Disclosures clause:
- Any oral statements made between the parties, such as representations, promises or warranties, are not legally binding.
- For such oral statements to become binding, they must be written down and signed by an authorised person from the party to be bound.
- This covers disclosures, representations, promises and warranties made through spoken words.
- The purpose is to avoid confusion over whether oral discussions are meant as formal agreements.
- It requires oral statements to go through proper documentation processes to take effect.
- This gives parties clear procedures for when casual discussions become formal commitments.
- It prevents potential misunderstandings about the status of oral exchanges.
- The signed written record provides evidence the party has agreed to be bound to the statement.
- Overall, the clause formalizes and clarifies the process for oral statements becoming enforceable
The development of oral disclosures clauses stems from the common law of contracts. Early English courts recognized that spoken words alone could form binding agreements between parties.
This followed ancient traditions of oral oaths and verbal promises under honor.
However, oral contracts became problematic to prove and enforce. Memories faded, accounts differed, and perjury occurred in attempts to escape commitments. Writing requirements emerged to bring certainty.
By the 17th century, key English statutes required written documentation for major contracts involving property, marriage and commerce. Oral agreements remained valid for minor everyday transactions.
Over time, written evidence became expected for more substantial contracts. Businesses favored documentation to lock in formal terms. Still, courts upheld oral deals if convinced of mutual understanding.
This mixture of written and oral contract law continued into modern times. To control risks from spoken discussions, contracts then commonly disclaimed unwritten agreements. Integration and 'entire agreement' clauses limited binding terms to the executed document.
Oral disclosures clauses took a further step by requiring transferee into writing for specified verbal exchanges. This prevented confusion between tentative talk and intentional commitments. Written authorization evidence made oral-to-formal transitions clear.
Today these clauses provide an orderly process so businesses do not unintentionally make or rely on informal spoken agreements.
They uphold longstanding principles of contract law while adapting to more complex modern transactions.
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