Certainty and Completeness of Agreement
Agreement is reached between contracting parties when an offer is made by one party and is unequivocally accepted by the other party. The offer must be sufficiently certain so as the parties know what is to be done by them, and the agreement must be complete, in the legal sense. An agreement is incomplete when an essential term has not been agreed or there are further matters to be agreed. Agreements 'in principle' are usually considered not to be complete, as are contracts expressly stated to be 'subject to contract'. In deciding whether a contract is complete, a court will consider a contract to be formed when, from the viewpoint of an officious bystander, the parties have agreed in the same terms on the same subject matter.
Verbal Contracts and Conduct
There is no legal impediment to two (or even more) parties entering into a contract based on their conduct and verbal statements or representations. Obviously, when the parties agree the terms of the contract by verbal statements, the binding terms of the contract are more difficult to ascertain and prove. Usually a court will look to the history of the performance of the parties to obtain assistance in determining what was actually agreed by the parties. Where one person however has not performed their part of the bargain, the court is left to more uncertain means in reaching a decision. Draft contract documents, emails, letters and order forms may lend assistance to deciding the terms of a verbal agreement, and courts have used similar agreements with third parties to apply a standard of reasonableness in determining the terms of the contract in the absence of writing.
Confirmation in Writing
In the event that a party refuses to sign a contract or an oral agreement is reached, in our view, it is essential to write to the person and confirm the terms of the contract as they are understood, to provide a greater degree of certainty - that may be proved by evidence at a later date - what the actual terms of the contract were. It may be useful to know that where a verbal agreement has been reached, which is later confirmed in writing but the written document does not properly record the terms, the contract may be rectified using the doctrine of rectification so as to reflect the actual agreement between the parties.