Oral Contracts – Are They Enforceable?
Monday, 10 October 2016
by Erin McAllister, Paralegal
A verbal contract is considered valid if it contains the following elements:
1 An offer,
2 Acceptance of the offer, and
3 Consideration or something of value that each of the parties agree to give or exchange to complete the contract.
So how can it be proved that an oral contract ever existed? This can be done through the actions of the parties involved. Common sense dictates that a person or a business wouldn’t provide a service or deliver the goods if an agreement with the other party didn’t exist.
However, it's important to understand which types of contracts absolutely must be written in order to be valid. Generally, the types of contracts in the list below need to be executed in writing in order to be enforceable. Contracts in any of these categories entered into verbally are not automatically considered "void," however. They are typically considered "voidable" and may be either affirmed or rejected by either party at any time.
Real estate sales;
Agreements to pay someone else's debts;
Contracts that take longer than one year to complete;
Real estate leases for longer than one year;
Contracts for over a certain amount of money (depending on the state);
Contracts that will last longer than the life of the party performing the contract; and
A transfer of property at the death of the party performing the contract.
An English law from 1677, the "Statute of Frauds," provides the basis for current written contract requirements. The goal of a written contract is to avoid fraud by requiring written proof of the underlying agreement. While state laws generally dictate the enforcement of contracts, all states besides New York and South Carolina have adopted the Uniform Commercial Code (UCC) that includes some form of the statute of frauds.
While oral contracts can be enforceable if they meet the criteria described above, it is always better to have an agreement in writing that memorializes the terms the parties agreed to during their negotiations. Furthermore, it is strongly encouraged to have an experienced attorney aid in the construction of such an agreement.
This information is made available by Spaulding Law for educational purposes only and not to provide legal advice. By using this website, you understand that there is no attorney-client relationship between you and Spaulding Law, unless you have entered into a separate representation agreement. This information should not be used as a substitute for competent legal advice from a licensed professional attorney.