How to Prove a Verbal Contract

To prove a verbal contract is by getting witnesses to testify that the agreement was made. Also, proving a contract existed can be supported by documents such as receipts, invoices, delivery, statements, text messages, and emails.

Author: Brad Nakase, Attorney

Email  |  Call (888) 600-8654

Verbal Contract Example

Reid is the owner of a woodworking shop that makes furniture and shelving units. He contacts a vendor, seeking to make a deal for regular orders of wood. For example, he would receive a shipment of pine every month and a shipment of walnut every two months. He calls the supplier over the phone and they come to an agreement, thereby making a verbal contract. However, when Reid expects his first shipment of pine, he does not receive it. He calls the vendor, who tells him that he has canceled the deal, having decided it was not enough money. Reid insists that their verbal contract was valid and the supplier is thereby violating the terms. Considering taking the matter to court, Reid wonders how to prove a verbal contract.

Are Verbal Agreements Valid in a Court of Law?

It is important for both business owners and those who conduct business with others to know how to prove a verbal contract. Written contracts are usually more common in the business world, but verbal contracts may still be enforced in a court of law as a valid form of agreement. While verbal contracts are enforceable, they typically have a shorter deadline by which to be enforced. This is because verbal contracts rely on people’s memories, which can fade or alter over time. For instance, an individual only has two years to file a lawsuit over the violation of a verbal contract. By contrast, an individual has four years to file a lawsuit regarding a violation of a written contract.

There are some varieties of contract that legally must be in writing in order to be enforceable. These contracts include the following:

  • Real estate contracts
  • Contracts meant to pay someone’s debt
  • Contracts related to marriage
  • Contracts that may take more than one year to fulfill

How Can One Tell if a Verbal Contract is Enforceable?

A verbal contract or agreement is generally enforceable. However, four elements must be true:

  • An offer has been made by a seller
  • A party has accepted the offer
  • There has been an exchange of something valuable
  • Both parties intended to make the agreement and were not speaking hypothetically or joking

Though the majority of written and verbal contracts can be enforced under the law, there are some cases in which an agreement can never be enforced. Any kind of contract is unenforceable if one of the parties lacks the mental capacity to enter into a contract. There are other cases in which oral contracts are invalid, including the following situations:

  • Marriage
  • Selling goods above the state-mandated amount
  • Transferring property
  • Contracts that name an executor of a will
  • Becoming she surety for another individual’s debt

Both oral and verbal contracts have the ability to be enforced in a court of law, but there can still be some difficulties. The court will attempt to analyze the key points of the case in order to enforce a contract. However, it can be difficult to establish the facts of a case when it boils down to a “he said, she said” narrative. Because the contract is currently a point of dispute, the parties are likely to disagree on the original terms. This makes it hard to weigh the evidence.

How Can Someone Prove a Verbal Contract?

When there is a disagreement related to a verbal contract, it is most likely that the issue comes from the misinterpreting of the original agreement. Essentially, each party believed the agreement to mean something different. For the person filing the suit, he or she would be best served by providing some kind of written communication to prove their side of the story. Some types of valid and helpful communication include the following:

  • Letters
  • Emails
  • Text messages
  • Quotes
  • Faxes
  • Voicemails
  • Notes made at the time of the agreement
  • Proof of payment, such as canceled checks or transaction statements

A party may also provide witnesses who were present when the agreement was made. These witnesses may testify to the existence of the agreement, as well as its terms. In addition to offering written evidence and witnesses, an individual may also prove a verbal contract by the actions of the involved parties.

When an individual enters into a verbal contract, he or she should take the following steps to avoid future issues with enforcement:

  • Getting receipts and quotes
  • Writing an outline of the established terms
  • Have a witness to the verbal contract or deal

Believe it or not, but handshake deals still form an official contract or agreement. From Bill Gates to Bill Clinton, many powerful individuals still use them to great effect. That said, while many deals may begin as handshake agreements, they are typically followed by written documentation.

What Are Problems Associated with Verbal Contracts?

When it comes to the enforcement of verbal contracts, the statute of limitations is a big issue. The statute of limitations is a time limit that determines when a lawsuit may be filed against another party. One should know that verbal agreements have a shorter statute of limitations. This is because the enforcement of verbal contracts relies heavily on human memory as evidence. After a few years, it is unlikely that someone would clearly recall the details of a conversation. For this reason, it is best to have something in writing to bolster one’s case. It will help eliminate any fraudulent contracts.

One should remember to have a witness whenever making a handshake deal, so that a third party has heard the terms of the contract. If there is no witness to this manner of deal, then one should be sure to act on the contract as soon as they are able.

If an individual acts on a verbal contract immediately, then he or she is offering more evidence that the contract exists and one has been compliant on their end. Other ways to support a contract include maintaining a written correspondence. Even writing a basic ‘thank you’ letter regarding the deal can be helpful.

Please tell us your story:

6 + 2 = ?

See all blogs: Business | Corporate | Employment

What is profit formula and how to calculate profit formula?

A business profit is revenue minus expenses. The profit formula in accounting calculates the net gains or losses incurred by the business for a period by subtracting the total expenses from the total income: Total Income – Total Expenses - Profit

What is invoice reconciliation?

Invoice reconciliation is the process of matching bank statements to incoming and outgoing invoices. The purpose of invoice reconciliation is to confirm that the data entry is correctly matched with every invoice.

What Makes a Verbal Contract Valid

A verbal contract is valid when contractual elements are satisfied, such as evidence of an offer, acceptance of the offer, and consideration which is an exchange of value between the parties.

Marketing Transport Company

The easiest way of growing your list of clients is to schedule a meeting with businesses that do a lot of shipping and introduce your transportation company. Then, engage an internet presence to market your transportation business.

What Can You Do with a Toxic Business Partner?

A bad partnership could lead to profit loss and toxic company culture. The first way of dealing with a toxic business partner is to schedule a meeting to discuss your concerns calmly.

Disruptive Business Model

Disruptive business models are disruptive innovations that bring new business ideas or technology to existing markets. A disruptive business does not fit the profile of a standard business model. Amazon is considered as one of the world's most disruptive companies.

How to Get a Business Loan with Bad Credit

For small business owners with bad credit, the easiest place to get a business loan is with the SBA. Although not easy, entrepreneurs with bad credit can get a small business loan.

How to Get a Small Business Grant

You can get a small business grant from the Small Business Administration. Also, check your local government for small business stimulus grants.

Pros and Cons of Etsy

Etsy Pro: Your products are given a large audience, and you easily sell your merchandise. Etsy Cons: You can only sell handmade or vintage merchandise, and there are many competitors.

What is a Breach of Contract in California?

A breach of contract in California arose when a party to a contract failed to achieve a legal duty the contract created. When a party to a contract fails to fulfill the terms of a binding contract, they are liable for damages for breaching the contract.

Business Equipment Leasing Pros and Cons

One advantage of equipment leasing is that you don’t need to come up with all the cash to buy the equipment. One disadvantage of equipment leasing is higher overall costs than outright purchasing the equipment.

LLC vs DBA

The main difference between an LLC and a DBA is that an LLC is a business entity, and a DBA is a registered fictitious business name. Sole proprietors, general partnerships, and LLC can register for a DBA.

What is an LLC and how does it work

An LLC is a business entity that protects the owners with limited liability protection. An LLC also offers pass-through taxation, which means the company’s profits and losses pass through to the owner’s personal tax level.

What Is a Disregarded Entity?

A “disregarded entity” refers to an entity with one owner and not organized as an entity such as a corporation, LLC, or partnership. For federal tax purposes, the disregarded entity and the owner, who is a natural person, are not treated separate.

California Breach of Fiduciary Duty

A fiduciary is a professional person who owes a legal and ethical responsibility to another person. Examples of people with fiduciary duties are lawyers, financial advisors, corporate officers, corporate directors, etc. A breach of fiduciary duty occurs when the professional person fails to do what was legally and ethically required of them.

List of 12 Biggest Business Startup Costs

It is a good idea for every entrepreneur to consider the costs associated with starting their business. Financing is stressful, but estimating startup costs goes a long way to ensuring a business succeeds.

Is it legal to sell homemade food in California?

California is one of the only states to allow individuals to sell homemade meals, including meals that contain meat. So long as you have California required permits and licenses, it is legal to sell homemade food in California.

10 Tips on How To Start A Food Truck Business

Running a food truck business is an exciting and trendy opportunity for any entrepreneur with a passion for food. If a business owner chooses the right financing options and follows the above tips, then he or she has every chance of success.

What is a demand letter?

A demand letter is a letter that is commonly written by a lawyer on behalf of a client setting forth facts supporting a demand for money. A demand letter is usually the first step in resolving a dispute between two opposing parties.

What is working capital cycles?

In business, a Working Capital Cycle is the period that a company waits to receive payment to create available cash. A long cycle means tying up capital for a longer time without earning a return. Short cycles allow your business to free up cash faster.

What Happens When Business Partners Disagree?

Before going nuclear, when business partners disagree, the partners should talk about how to move forward. If talking fails, the partners may discuss a buy-out. However, if there is wrongdoing by one business partner, a lawsuit may be an option.

Bank Statement Business Loans

A business bank statement loan lender relies only on the company’s bank statements to qualify the borrower.

How to Prove a Verbal Contract

To prove a verbal contract is by getting witnesses to testify that the agreement was made. Also, proving a contract existed can be supported by documents such as receipts, invoices, delivery, statements, text messages, and emails.

What are business performance metrics, and why it is important?

Business performance metrics is a quantifiable measured value that shows the company’s progress and growth. Business metrics track the business progress and performance. A quantifiable measurement may include customers, revenue, and profits.

Is Sabotaging a Business Illegal?

Yes, sabotaging a business is illegal regardless of who is saboteur, e.g., business partner, competitor, family member, or customer.

See all blog: Business | Corporate | Employment

© Copyright | Nakase Law Firm (2019)