Are Oral Contracts Enforceable in California

Oral contracts are binding and enforceable in California. Although an oral contract is challenging to prove, an experienced business contracts attorney can easily prove the challenges.

Author: Brad Nakase, Attorney

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Are Oral Contracts Enforceable in California

Theodora is applying for a new job as an aerospace engineer. Currently, she lives in San Francisco, but she has submitted an application to a top-tier agency in Los Angeles. To her joy, she gets an interview with a manager at the company. The manager, Tom, talks to Theodora a few times on the phone, and the last time, he tells her how impressed he is with her qualifications. “Theodora,” he tells her, “we would love to have you join the team. When can you start?” Thrilled, Theodora tells him that she can start the next week, but she will need a few days to move to Los Angeles. In response, Tom says, “That’s great. We look forward to it.” Taking this as confirmation of her employment, Theodora gives her thirty-day notice to her apartment manager and moves herself, her boyfriend, and her cats to Los Angeles for her new job. However, when she shows up to her new workplace, they look embarrassed. Tom meets her and says, “I think there was a mistake. We never agreed to hire you. In fact, we decided on someone else.” Theodora is horrified, and angry. She had understood them to have an oral contract, agreed to verbally over the phone. When she says this to Tom, he tells her that she cannot prove there was a contract. Because Theodora has no written evidence of an employment agreement, how can she prove the employer violated a contract? She wonders if oral contracts are enforceable in California, and if she can take Tom to court over the issue.

Do Contracts Have to Be in Writing to Be Enforceable?

There is a commonly held belief that to be enforceable by law, a contract must be in the form of writing. It is certainly a good idea to get a contract in writing, because having a document that is signed by all parties provides excellent evidence in the event of legal proceedings. The written document offers concrete evidence that an agreement existed, and the deliberations will not instead rely on one person’s word against another.

However, a contract does not have to be in writing for it to be legitimate, and importantly, for it to be valid and enforceable in a court of law. It is true that some types of contracts need to be in writing to be valid and enforceable, but this is not true for all contracts.

What Is California’s Statute of Frauds?

As discussed above, while oral contracts are valid and enforceable in California, there are certain kinds of contracts which must be in writing. Therefore, it is useful to review these few exceptions. California describes these types of contracts in the state’s Statute of Frauds, which is provided in the state code at California Civil Code Section 1624.

While the law has the word “fraud” in it, the statute does not have anything to do with deception. Rather, the Statute of Frauds simply lists the different types of documents that need to be written or have a comparable record as evidence. To be enforceable, these types of contracts need to have a written element and cannot be oral in nature.

The types of contracts that cannot be enforced as oral contracts include the following:

  • An agreement that cannot be fulfilled within a year (example: an employment contract that lasts for 18 months, or a lease that extends beyond a year)
  • An agreement to cover the debt or default of another party
  • An agreement regarding a sale of real estate
  • An agreement that authorizes a third party (broker or agent) to take part in a real estate transaction or lease a property for longer than one year
  • An agreement that cannot be fulfilled during the lifetime of the individual promising to do it
  • An agreement for the sale of goods over $500
  • An agreement for the sale of personal property over $5,000

Taking these examples into account, other kinds of contract may be enforceable by law even if they are only verbal contracts. That said, even if an oral contract is technically enforceable, it will be challenging to prove that it ever existed. Without evidence, a court will have to study the nature of the relationship between parties and determine if there was ever a concrete agreement that both understood.

Are There Exceptions to the California Statute of Frauds?

Even if both parties have not signed a physical document for one of the contracts listed under the Statute of Frauds, there are potentially other ways of enforcing the contract. According to California law, a party may still have the power to enforce this kind of contract if the following is true:

  • There is evidence of an electronic communication such as text, phone call, or email that indicates the existence of a legitimate contract.
  • There exists a written confirmation by the individual trying to enforce the contract within five days of the agreement, and there is not a quick written refusal of the confirmation.
  • The party against whom contract enforcement is sought sends a written verification of the existence of the contract.
  • The party against whom contract enforcement is sought admits that the contract is valid in testimony or in a court pleading.

For guidance on a particular contract situation, an individual should speak to a California breach of contract attorney.

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