How Can Verbal Contracts Be Enforced?

A verbal contract or oral contract can be enforced by a court when the plaintiff proves with witnesses or documents that an agreement was made and the plaintiff did something to his detriment.

Brad Nakase, Attorney

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How Can Verbal Contracts Be Enforced, Example

Cassie owns a business where she makes custom dollhouses for customers. One day, she takes one of her dollhouses to a preschool as a gift for the children. Impressed with the beautiful design, one of the parents approaches Cassie and asks if she would make a custom house for her daughter. Cassie agrees, telling the parent what her price is for that kind of design. The parent nods, seemingly accepting the offer, and the two shake hands as a form of verbal contract. Later, when Cassie has finished the dollhouse, she delivers it to the customer’s home and asks for her payment. The customer looks shocked, saying that she thought it was complimentary, like the one given to the preschool. Upset, Cassie wonders how verbal contracts can be enforced, and whether hers can be proven in a court of law.

Is a Verbal Contract Legally Enforceable?

From a legal perspective, verbal contracts are considered to be as valid as written contracts. While they can be difficult to prove in a court of law, there are relevant state and federal laws that can enforce these kinds of contracts and protect the legal rights of those who engage in them. That said, it is still best for the protection of both parties to put contracts in writing.

What Are the Elements of a Verbal Contract?

A verbal contract is considered legitimate and enforceable if it contains the following elements:

  • An offer
  • The acceptance of the offer
  • Consideration or something valuable that each party agrees to offer in exchange to complete the contract

Is It Possible to Sue Over the Breach of a Verbal Contract?

Even though it is not in writing, a verbal agreement qualifies as a contract. If the contract is legitimate and valid, then it counts as a binding agreement between businesses or parties. Certain oral agreements are technically enforceable, but they can be complicated to enforce due to the potential lack of evidence and information.

Enforcing a verbal contract often leads to “he said, she said” situations, which can be more difficult to validate due to a lack of evidence of agreements. This can easily become a battle between two parties, and therefore it is recommended to talk to a contract lawyer about having a contract in writing. It can also be helpful to have witnesses to offer confirmation or proof of the existence of the verbal contract or its terms. Witness testimony will be taken into consideration should the case ever proceed to court.

A court can encounter a complication when it must identify the key terms of a verbal agreement. This can be difficult to discern when the two parties do not agree on the terms of the contract. The two parties may not even agree that there was a contract at all.

The individual or party that wants the contract to be enforced has the hard job of proving the terms of the agreement in addition to the existence of the verbal contract.

A party seeking to provide proof has a few options. These include the following:

  • Provide evidence to the court of the plaintiff’s performance of services detailed in the contract
  • Provide proof of any money exchange showing a deal was made
  • Provide proof of a loan or payments
  • Provide a check written as a down payment or deposit
  • Offer witnesses who were present at the time the agreement was made
  • Provide documentation such as emails, text messages, and voicemails that support testimony

Enforcing a verbal contract is one of the more difficult types of cases because of the differing elements in each case and the lack of written evidence.  If a business owner is trying to sue another party regarding the breach of a verbal contract, he or she is advised to seek legal advice from a contract lawyer. This lawyer can review documents or the law on verbal contracts, providing professional advice on how best to proceed.

How to Prove the Existence and Terms of a Verbal Contract in Court

The problem with verbal contracts is that is can be very difficult to prove their existence or terms in the event one party takes the other to court. If one party sues the other over breach of contract, he or she will need to go to extensive lengths to prove that the contract even existed, due to the lack of written evidence. If there are no witnesses to the creation of the contract or any written documents supporting the claim, then verbal contracts can be easily discredited.

How, then, can an individual prove that a verbal contract ever existed? He or she can find proof through the actions of the other parties involved in the agreement. According to common sense, if a party delivered a good or provided a service, then a contract must have existed. For example, if a woodworker made a contract with a lumber yard for a delivery of oak boards, and two weeks later a shipment of wood arrived at the woodworker’s workshop, a contract may be implied.

What Is the Statute of Frauds?

In certain circumstances, an oral contract may be unenforceable in a court of law. This occurs when the specific case falls under the Statute of Frauds. This law indicates several kinds of contracts that must be written down in order to be valid and enforceable. These contracts include the following:

  • Marriage
  • Transferring ownership of land or real estate
  • Contracts that cannot be performed within a year
  • Ensuring the debt of another party
  • Taking the role of executor of a will
  • The sale of goods greater than a certain value; the Uniform Commercial Code (UCC) rules over contracts involving the sale of goods

What Is the Statute of Limitations for Contracts?

The statute of limitations is the time limit within which a party can file a lawsuit against another party to get damages in the event of a breached contract. With verbal contracts, there is generally a shorter statute of limitations timeframe as compared to that for written contracts. This is because of the need for fresher evidence. After a certain period of time, parties and witnesses may not remember details as clearly, which can become a serious problem when there is no written evidence to consult.

What Are Some Tips for Making Verbal Agreements?

It is always best to play it safe and get everything in writing, including agreements or contracts. Therefore, a businessperson should be sure to draft a general contract for products and for services in order to record the sale of those goods and services. That said, if an individual cannot avoid forming a verbal agreement, he or she should refer to the following tips to avoid being caught in a difficult legal situation:

  • Gather secondary written documents, such as emails and texts, which can help strengthen a case when there is no written contract.
  • Draft a written copy of the contract terms and send it to the other party.
  • Ensure that there is a witness to the agreement being made.

One should remember that while verbal contracts may be legal and technically enforceable, it is in one’s best interests to put all contracts and agreements in writing.

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