Frequently, oral agreements occur in the form of promises to pay in exchange for a good. Consider the yard sale. A customer comes up to the yard sale, finds a vinyl in great shape and offers to pay $5.00. If the seller thinks it is a good deal, they accept the offer. The customer hands over the money and leaves with ownership of the vinyl. This handshake agreement is a quick transaction and allows for both parties to leave happily. The trust here is short term and based in part on the community relationships.
Oral agreements over longer or more significant deals can be more problematic. For example, there could be a handshake agreement between a buyer and seller of an automobile. The payments are to be monthly for a period of six months for a couple hundred dollars each time. No contract was written, but there was a handshake and the buyer drives off with the car on the date of sale.
What happens if during the fourth month, the buyer disappears. The buyer has not paid off the full amount of the car, but the car is gone as well. How does the seller recover their damages? This can be difficult to prove there was an agreement. In this case, the seller can demonstrate to the court the handing over of title and the three months of payment. This history of action and the title of the car may be enough to establish the existence of a contract.
On the other hand, depending on context, the buyer may argue they were just friends and the money was for something else. How is a Court supposed to fully know the truly between the parties? The lack of evidence over the actual existence of the contract will make enforcement in a courtroom challenging.
Oral agreements have their place in society, they are based on and can build long term relationships or permit quick, one-off transactions with ease. It is once the agreement becomes complicated and between people who may not have the history of working together that written contracts are better. A written document containing the promises and duties between the parties is proof of the agreement and its existence is harder to dispute. This allows for better enforcement and more complicated arrangements.
Oral agreements are not inherently bad or exist without uses in the modern age. There is a time and a place for oral agreements. Just be cautious and know when not to use an oral agreement.