Many people believe that a written contract is required before they can take legal action. However, that is not always the case.
In Ontario, verbal agreements can be legally enforceable depending on the circumstances. If someone agreed to pay you for goods or services, repay money they borrowed, or fulfill another obligation and failed to do so, you may still have options for recovering what you are owed.
The key factor is whether you can provide enough evidence to show that an agreement existed and that the other party failed to meet their obligations.
Are Verbal Agreements Legally Binding in Ontario?
Yes, verbal agreements can be legally binding in Ontario. A verbal agreement, also known as an oral contract, may be enforceable when the basic elements of a contract are present.
This generally means that one person made an offer, the other person accepted it, both parties agreed to the terms, and there was some form of exchange involved, such as payment for goods or services.
While written contracts are often easier to prove and can clearly outline each party’s responsibilities, the absence of a written agreement does not automatically prevent someone from pursuing a claim.
What Evidence Can Help Prove a Verbal Agreement?
When there is no signed contract, the available evidence becomes especially important. In Small Claims Court, the judge will consider the information provided by both parties and determine whether the evidence supports the claim.
Evidence that may help demonstrate that an agreement existed can include:
- Text messages or emails discussing the agreement
- Payment records, such as e-transfers or bank statements
- Invoices, estimates, or receipts
- Photos or records showing completed work
- Witness statements from people who were involved or aware of the agreement
A single piece of evidence may not always be enough on its own. However, multiple records that support the same timeline or version of events can help strengthen your position.
Common Situations Where There Is No Written Contract
Verbal agreements are common in many everyday situations. For example, someone may agree to repay a personal loan, hire a contractor for work, pay for freelance services, or purchase an item without creating a formal written agreement.
When one party does not follow through on their obligations, the other party may have the option to seek compensation through legal channels.
Can You Sue Someone in Small Claims Court?
If someone owes you money and refuses to pay, Small Claims Court may be an option. In Ontario, Small Claims Court handles monetary disputes of up to $35,000, making it a common avenue for individuals and businesses seeking to recover unpaid amounts.
Small Claims Court matters can involve disputes such as unpaid invoices, unpaid loans, breach of contract, property damage, or payment disputes related to goods and services.
Although the process is designed to be more accessible than higher courts, it still requires proper documentation, filing procedures, and preparation.
What If the Other Person Denies the Agreement?
A common challenge with verbal agreements is that the other party may deny that the agreement ever existed.
When this happens, the court will review the evidence presented by both sides. The judge will consider the overall circumstances, including communications between the parties, payment history, and any other documentation that supports either version of events.
This is why keeping records of conversations, payments, and agreements is important, even when the original arrangement was informal.
Is It Worth Pursuing a Claim?
Before starting a Small Claims Court action, it is important to consider whether pursuing the claim is the right decision for your situation.
Factors to consider include the amount of money involved, the strength of your evidence, whether the other party is likely able to pay, and whether the matter could be resolved through negotiation.
Taking legal action involves specific procedures and deadlines. Ensuring your claim is properly prepared from the beginning can help avoid unnecessary delays.
How a Paralegal Can Help With Small Claims Court
A licensed paralegal can help you understand your options and guide you through the Small Claims Court process.
Support may include reviewing your evidence, preparing court documents, ensuring documents are properly served, negotiating with the other party, representing you during settlement conferences, and preparing your case for trial if necessary.
Having professional guidance can help ensure your claim is presented clearly and that important legal requirements are followed.
Discuss Your Small Claims Court Matter
Not having a written contract does not necessarily mean you have no legal options. If someone has failed to honour an agreement, understanding your rights and available remedies is an important first step.