A parol agreement, also known as an oral agreement, is a contract between parties that is made verbally rather than in writing. While such agreements can be valid and enforceable, they can also be risky, as there is no written record of the terms agreed upon.
When entering into a parol agreement, it is essential that both parties have a clear understanding of the terms of the contract. This includes the scope of the agreement, the responsibilities of each party, and any deadlines or performance metrics that must be met.
It is also important to ensure that any promises made during the negotiation process are captured in writing. This can help avoid misunderstandings or disputes later on, as there will be a clear record of the terms agreed upon.
Despite the risks associated with parol agreements, they are often used in situations where parties need to move quickly or where the terms of the agreement are relatively simple. For example, if two friends agree to split the cost of a vacation rental verbally, that could be considered a parol agreement.
However, for more complex agreements, it is generally recommended to have a written contract in place. This can help avoid confusion or disagreements later on, as the terms of the agreement will be clearly spelled out.
In conclusion, while parol agreements can be valid and enforceable, they can also be risky. If you are considering entering into an oral agreement, be sure to have a clear understanding of the terms and consider capturing those terms in writing to help avoid disputes down the road.