From Casual to Enforceable: Making Informal Contracts Legally Safe

Informal contracts feel quick and easy. But without clear terms or documentation, tiny misunderstandings can spiral into full-blown headaches. To complicate matters further, courts can enforce these agreements but only if they tick the four classic boxes: offer, acceptance, consideration, and legal intent.

So where does that leave you? Typically, you may consider informal agreements in a number of scenarios:

• Is it OK to hire a freelancer via email?
• Can you really trust a verbal $10,000 loan to a buddy?
• What about rent agreed over text, or a project via Slack?
• And those collabs on Instagram—are they enforceable?

This post dives into that messy middle ground. We'll unpack when and why informal contracts hold up, why they sometimes don’t, and, most importantly, how to build a no-fuss “informal” agreement that’s fast, flexible, and actually enforceable.

What is an informal contract? 

An informal contract is any agreement made without the usual formalities like official paperwork, signatures, or legal stamps, but is still legally enforceable.

As long as there’s a clear offer, acceptance, mutual intent to form a contract, and something of value exchanged (called consideration), the law may recognize it as valid. These contracts often come together over calls, emails, or quick chats, with little to no legal jargon.

Let’s look at an informal agreement example. In Jaevee Homes Ltd v Fincham Demolition (May 2025), a UK court ruled that a WhatsApp conversation between a property developer and a demolition contractor created a binding contract. There was no formal agreement, just clear intent, a defined scope, and an agreed price. This is how an informal contract is enforced in real life.

What makes a contract “informal”? 

As we discussed, an informal contract is simply an agreement made without formal legal processes. What makes it ‘informal’ is the absence of structure, and not the seriousness of the agreement.

For a contract to exist, whether informal or not, it must include the following four key elements:

• Proposal (offer): One person proposes specific terms
• Acceptance: The other person agrees to those terms
• Consideration: Something of value is exchanged (like money, goods, or services)
• Intention to create legal relations: Both parties meant for the agreement to be taken seriously and legally binding

When do people use informal contracts?

Informal contracts are present everywhere in our daily lives, especially where speed or trust matters more than paperwork. Some common informal contract examples are:

• Freelance gigs: A quick email thread outlining project scope, deliverables, payment, and timelines qualifies as a Letter of Appointment (LoA), an informal yet legally binding contract for freelance work under common law. Even in email form, it meets the essential requirements (offer, acceptance, value exchange, intent), making it enforceable 

• Lending money to a friend: Verbal agreement is enforceable if it meets the classic four elements: offer, acceptance, consideration (money lent), and intention (serious promise to repay). Courts uphold such agreements
• Rent reduction via text: Text messages count as a valid written agreement if they clearly express terms and intent, and meet fundamental contract formation criteria. Courts have accepted texts (e.g. rent reductions or repairs) as binding when the four elements are present
• Short‑term work via Slack: Chat‑based project scopes with deliverables, pricing, and timeline serve as informal written agreements—functionally the same as LoAs discussed above
• Collaboration between small businesses via call/Instagram: Verbal agreements over messaging platforms or calls can be enforceable if someone later documents specifics (e.g. message thread summaries, confirmation emails).Proving all contract elements and mutual understanding that it’s a serious business deal is key. If challenged, logs/chats serve as evidence

But can such informal agreements really hold up in court?

Are informal contracts legally binding? 

Yes, informal contracts can be legally binding, but they must meet the standard conditions of a valid contract:

1. There is clear mutual consent

Both parties must clearly agree to the same terms. There should be no misunderstanding about what’s being offered and accepted. For example: You agree to redesign a website for $15,000, and the client confirms it over email. This is mutual consent.

2. Terms are specific, not vague

The agreement should be specific enough to avoid confusion later. Vague terms like “let’s discuss payment later” can weaken enforceability. Instead, “You’ll deliver the project by July 10, and I’ll pay $15,000 by July 15” is clear and trackable.

3. They’re backed by law in your country

Informal contracts are recognized under law in most countries, even without written documentation, but when the core elements are present:

• United States: Recognised under common law and the Uniform Commercial Code (UCC)
• United Kingdom: Enforced through common law and the Contracts (Rights of Third Parties) Act 1999

For instance, in St. John’s Holdings, LLC v. Two Electronics, LLC (2023), a buyer agreed via text to purchase a property for $10.8 million. The seller replied “Done,” then later backed out. The court ruled in favor of the buyer. Why? Because the texts were clear, showed offer and acceptance, and formed a binding agreement.

3 Types of informal contracts

Informal contracts come in different forms. What matters is the clarity of the agreement and not the format. That said, here are the most common informal contract types:

1. Verbal contracts

When a verbal agreement is spoken, not written. Like, “I’ll fix your website. You can pay me next week”. 

Spoken agreements are classic, yet risky. They’re legally valid in most cases (except for real estate or high-value assets), but incredibly hard to prove.

Pro tip: Follow up with a message or email to create a record.

2. Implied contracts

These are neither spoken and nor written, but inferred from actions. For example, when you sit in a barber’s chair and get a haircut, it’s understood that you’ll pay for the service.

Implied contracts are common in service settings, but when expectations aren’t aligned, disputes may follow. “I asked for a trim, not a full makeover.”

3. Email or text agreements

A deal confirmed over email or messaging apps can also form a valid contract.

For instance, an email stating “Let’s move forward with the 3-month retainer at $50,000/month” can lock a deal. 

Courts often treat email, Slack, or even WhatsApp messages as enforceable contracts, especially when terms are specific. Still, if key terms aren’t discussed, like payment schedules or deliverables, disputes can arise.

Now, let’s see how informal contracts are different from formal ones.

Formal vs. informal contracts 

Both formal and informal contracts can be valid, but the key differences lie in how clearly they’re written, how structured they are, and how easy they are to enforce. Here is how they differ:

Risks of relying solely on informal contracts 

Informal contracts might seem like a simple option at the moment, but they come with real risks if things go wrong.

1. Misunderstandings: “That’s not what we agreed on”

Without written terms, people often remember things differently. Even small gaps in understanding, like delivery timelines or payment terms, can turn into serious disputes. Remember, when there’s no clarity, there’s no protection.

2. No paper trail: “Can you prove it?”

If your agreement is verbal or based on casual messages, it’s much harder to prove in court. Without emails, texts, or documented timelines, it becomes a matter of “he said, she said.” That makes enforcement tricky, and expensive.

3. Relationship strain: When things go south, even friends get litigious

Informal contracts often happen between people who trust each other: friends, clients, collaborators. But when something goes wrong, even strong relationships can fall apart—especially when money or responsibility is involved.

How to Write an Informal Contract Safely 

An informal contract doesn't need to be filled with legal phrases, but needs clarity.  Follow these steps to create one that’s simple, fair, and enforceable:

Step 1. Discuss the terms clearly: Start with a clear conversation. Make sure both parties agree on what’s being exchanged, who’s responsible for what, and when it needs to happen. Talk through deliverables, deadlines, and expectations

Step 2. Confirm consideration: Every contract must involve value on both sides. Be specific,whether it’s a payment, a service, or a product. Remember, when there is no value, there is no contract

Step 3. Verify legal compliance: Make sure your agreement doesn’t violate any laws. Even informal deals must comply with legal standards to be enforceable

Step 4. Document the agreement: Write it down. Use email, message, shared doc, anything that captures the agreed terms. Bullet points are great for clarity. This serves as a record if questions come up later

Step 5. Acknowledge the agreement: Make sure both people clearly say they agree, by sending a message, signing digitally, or replying with a simple “Yes.”

Step 6. Save the proof: Keep copies of your agreement and any related messages. They’re your safety net in case disputes arise

How Docupilot helps you formalize contracts and avoid mishaps

You don’t need to be a lawyer, or even hire one, to make an informal contract formal and easy to enforce. Docupilot gives you the tools to help you make informal agreements clear, secure, and legally sound.

1. Customizable templates

Create contracts that fit your unique needs, ranging from a freelance gig, payment plan, or one-time service agreement. Smart fields make editing simple, even if you’re not a legal expert. Just pick a template, tweak the terms, and you’re good to go.

2. From chat to contract in minutes

Docupilot can turn your emails, Slack messages, or meeting notes into structured agreements using AI-powered drafting. You don’t need to start from scratch; just drop in your notes, and Docupilot will generate a contract in seconds.

It also fills in the essentials automatically, like payment terms, IP rights, and cancellation policies, so that your agreement covers all the important legal grounds without extra effort.

2. eSignatures

There is no need for printing, scanning, or chasing signatures. You can send the contract for digital signing and receive confirmations within minutes. It is also legally binding and works across devices like laptops, tablets and even your mobile phone.

3. Audit trails

Docupilot automatically tracks who signed, when, and from where. That means you always have a verifiable record if questions arise later.

4. User-friendly interface

Docupilot is designed for non-lawyers, making contract creation simple and stress-free. The interface is clear, with plain language, smart fields, clean layouts, and helpful prompts that guide you through every step.

Don’t leave it to luck; put it in writing

Informal contracts are a natural part of doing business and forging relationships. Whether it's an agreement over email or a quick confirmation by text, these deals can be valid, but only if they’re clearly documented.

When the stakes are low, informal works. However, when things do not move in the direction you desired, clear terms can prevent costly problems that may arise later. 

That’s where Docupilot steps in. It helps you turn quick, casual agreements into legally sound contracts, fast. With customizable templates, eSignatures, and audit trails built in, you don’t need legal expertise to protect your business.

Want to bring structure to your informal deals? Sign up for Docupilot or book a demo today.