Society For Human Resource Management (SHRM) Certified Professional Practice Exam

What is the main concern regarding an oral contract in employment?

1. The content in the contract may be false

2. The details are not thorough

3. The content may be unofficial

4. The wrong person might be conveying the information

The correct answer is: The content may be unofficial

The main concern regarding an oral contract in employment primarily revolves around the notion that the content may be unofficial. Oral contracts, by their very nature, lack the formal documentation that written agreements provide. This absence of a tangible, signed document can lead to uncertainties and disputes regarding the terms of the agreement. Without written evidence, it can be challenging to verify what was agreed upon, creating risks for both the employer and employee. For instance, if either party recalls the terms differently, establishing the agreement's parameters can become problematic. Moreover, without formal documentation, the enforceability of such contracts may come into question, since many legal systems recognize the validity of written contracts over oral ones. In contrast, other concerns such as the potential for the content to be false, a lack of thorough details, or issues related to who conveys the information, while valid in some contexts, do not encapsulate the fundamental vulnerability associated with oral contracts as effectively as the aspect of their unofficial nature does. Therefore, the lack of formality and the difficulties therein solidify the primary concern surrounding oral contracts in employment settings.