Contracts and Verbal Agreements


Share This Post

In short, a contract is an agreement entered into by two or more parties with the serious intention of creating a legal obligation and functions to provide a legal framework within which persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them.

It is very important to include clearly expressed contractual obligations for both parties in clear and unambiguous words. This clarity will assist in providing increased certainty to the parties and minimise the risk of misinterpretation.

In order for a contract to be valid the following items should be present;

  • There must be consensus between the contracting parties on all material aspects of the agreement

  • The parties must have the necessary legal capacity to enter into the contract

  • The necessary formalities must be observed, for example, it should be in writing and signed

  • The agreement must be legal and lawful and it should not be an act or agreement that is prohibited by law or common law

  • The contractual obligations must be possible of performance

  • The content of the agreement must be enforceable.

The Employment contract is a legal agreement between a specific employer and a specific employee which stipulates the written conditions of employment and can be permanent or temporary in nature.

Important information to have in a contract of employment includes;

  • Full name and address of Employer

  • Full name and surname of Employee including ID number

  • Place of Employment

  • Job title and a brief job description

  • Commence date

  • End date in the event of a fix term/ temporary contract

  • Working hours

  • Wage or the rate, method of calculating wages and frequency of payment

  • Rate of pay for overtime work (only where applicable)

The courts have found that a person is considered to be an employee from the moment that the employment contract is concluded and this applies even in the event that employee has not yet started work for the employer. This applies even if nothing has been put into writing or signed, and the contract of employment has only been verbally agreed between the two parties.

A verbal agreement in South African Law is still a binding agreement between the parties involved. These agreements are however hard to uphold or enforce as neither party has something in writing to fall back on in the event that a dispute arises.

It is not advisable to enter into verbal agreements with employees as a written contract gives the employer tangible proof in the event of a dispute arising regarding the terms and conditions of said agreement. It would therefore give the employer a greater chance of success should the terms and conditions be challenged by the employee.


For more information on the above topic, please contact the LabourNet Helpdesk at

0861 LABNET (0861 522638).

Not yet a LabourNet client, but would like to know more about our service and products?

Email us:

More To Explore