The Binding Nature of Oral Contracts in Uganda: When Spoken Promises Carry Legal Weight

In everyday life, we make countless promises, to buy, to sell, to deliver, to pay later. Many of these promises are made not in writing but in conversation, sealed with a handshake or a word of trust. But what happens when one party fails to keep their end of the bargain? Can spoken agreements, or oral contracts, truly stand in court?

In Uganda, the law says yes — at least, in most cases.

 

Understanding the Legal Foundation

The Contracts Act, 2010, is the principal law governing agreements in Uganda. According to Section 9(1) and (2), a contract is defined as “an agreement made with the free consent of parties with capacity to contract, for a lawful consideration and with a lawful object, with an intention to be legally bound.”

Nowhere in this law does it say that a contract must be written down to be valid. This reflects a crucial legal principle: the law gives effect to the parties’ intention, not necessarily the form in which that intention is expressed.

In other words, if two people agree — freely, knowingly, and with mutual understanding — and their agreement meets all the elements of a contract, then even a verbal agreement can be binding and enforceable in Uganda.

 

The Elements of a Valid Oral Contract

For an oral contract to hold up in court, it must contain the same essential elements as a written one under Section 10 of the Contracts Act, 2010:

1. Offer and Acceptance:
   One party must make a clear offer, and the other must clearly accept it. For example, if A says, “I will sell you my laptop for 500,000 shillings,” and B says, “I agree,” that exchange constitutes offer and acceptance.
2. Intention to Create Legal Relations:
   The parties must genuinely intend for their agreement to have legal consequences. A casual promise between friends, like “I’ll treat you to lunch next week”, lacks this intention and is not enforceable.
3. Consideration:
   Each party must give something of value, money, goods, or a service, in exchange for the promise. A one-sided promise without consideration is generally void.
4. Capacity to Contract:
   Both parties must have the legal capacity, be of sound mind, and be at least 18 years old.
5. Free Consent:
   The agreement must be entered into voluntarily, without coercion, fraud, misrepresentation, or mistake.
6. Lawful Purpose:
   The object of the agreement must be legal. An oral agreement to do something illegal (for example, smuggling or bribery) is automatically void.

If these elements are met, an oral contract is as legally valid as a written one.

 

When the Law Requires a Written Contract

While oral contracts are generally binding, some agreements must be in writing to be valid under Ugandan law. This requirement helps prevent fraud and ensures clarity for transactions with significant financial or social implications.

Some key examples include:

• Land Transactions:
  Under Section 54 of the Land Act, any agreement for the sale, lease, or transfer of land must be in writing and, in some cases, registered. An oral agreement for the sale of land is void and unenforceable.
• Employment Contracts (Certain Cases):
  The Employment Act, 2006, requires written contracts for employment exceeding six months or for continuous service.
• Contracts under Seal or Requiring Registration:
  Some agreements, such as company documents, deeds, or mortgages, must follow specific written and formal requirements under respective laws.

These exceptions exist to promote transparency and accountability in transactions that carry higher stakes.

 

Why Oral Contracts Are Difficult to Enforce

While the law recognizes oral contracts, proving their existence in court is another matter entirely.

The cardinal rule in litigation, “He who alleges must prove,” applies fully here. The party claiming that an oral agreement exists must convince the court that the contract was indeed made and that its terms are clear.

This is often where things fall apart.

Without a written document, the dispute becomes one person’s word against another’s. Courts describe such cases as “swearing contests.” The credibility of witnesses, consistency of statements, and corroborating evidence all become crucial.

Evidence that can support an oral contract claim includes:

• Witness testimony: People who were present when the agreement was made.
• Electronic communications: Text messages, WhatsApp chats, or emails referring to the deal.
• Part performance: Actions that suggest the existence of an agreement, such as delivery of goods, part payment, or performance of services.
• Financial documents: Bank statements, invoices, or receipts showing payment.
• Audio or video recordings: Where available and admissible in court.

 

A Lesson from the Courts

In Justine E.M.N. Lutaaya v. Stella Nantongo & Anor (Civil Suit No. 212 of 2002), the High Court of Uganda dealt with a dispute over an alleged oral agreement. The court emphasized that without clear and corroborative evidence, it could not enforce the alleged contract. The claimant’s failure to substantiate their claim led to dismissal of the case.

This case highlights a critical truth: it’s not enough to have an oral agreement; you must be able to prove it.

 

The Practical Reality: The Risk Lies in Proof

In theory, oral contracts uphold the flexibility and freedom of contracting; they allow people to do business quickly and informally. But in practice, they are risky because of the difficulty of proving their terms.

Disputes often arise from misunderstandings about what was said, promised, or intended. Even honest parties may remember conversations differently. That’s why legal practitioners and judges frequently advise:

“If it matters, put it in writing.”

A written document provides certainty, reduces ambiguity, and serves as solid evidence in court. It protects both parties and helps maintain trust in commercial and personal relationships.

 

 Oral Contracts Are Binding, But Writing Is Wise

Ugandan law clearly recognizes oral contracts as legally binding, provided they meet the standard elements of a valid contract. However, statutory exceptions exist, particularly in areas like land, employment, and formal instruments.

The real challenge lies in enforcement, not recognition. Proving the existence and terms of an oral agreement can be daunting, and without corroborating evidence, even genuine claims may fail in court.

While the law gives parties the freedom to make oral agreements, prudence demands written documentation. Writing it down doesn’t make the promise more honest; it simply makes it clear, certain, and enforceable.