Does a Verbal Agreement Count as a Contract?

Yes, a verbal agreement count as a contract when the agreement meets three requirements: 1) There was a clear offer, 2) The aggrieved party accepted the offer, and 3) The aggrieved party gave the offering party something of value in exchange.

Maggie and Sylvia are neighbors in Los Angeles and are casually friendly. They both own small houses in Pacific Palisades. When Sylvia discovers that she must travel to Tokyo for two months for work, she asks if Maggie will watch over her house. Maggie agrees to water Sylvia’s plants, pick up the mail, and feed Sylvia’s cat Pepe while she is away.

Sylvia offers to pay Maggie $350 for this, and Maggie accepts. Sylvia goes to the bank, withdraws the cash, pays Maggie, and leaves the next day, confident that her neighbor and a new friend will fulfill the terms of the deal, so she doesn’t have to worry about the house.

A month passes, and Sylvia returns from Japan, tired after a long flight. When she gets to her house, the place is a mess. The plants are dead, the mail has piled up on the deck and been damaged by the rain, and worse, her cat is nowhere to be found.

The next morning, Sylvia goes to Maggie’s house and demands answers. Maggie says she’s been busy and forgot all about the deal. Sylvia demands that Maggie pay her the $350 back, but Maggie refuses and says she spent it.

Did Sylvia and Maggie have a legitimate verbal agreement, and would it hold up in a court of law? Sylvia certainly thought so and will seek to recover not only the $350.00 but additional damages for the plants, the mail, and her beloved cat.

Many believe that the only contracts that matter are those that parties put in writing. While contracts sealed by signed documents are more permanent and lasting, some oral agreements stand up in court.

When an oral contract is in place between two parties, but one party fails to fulfill the agreed-upon terms, they have violated the contract.

What Are the Components of a Verbal Contract?

A verbal agreement is a spoken contract arranged between two parties. Oral contracts are sometimes lawfully binding, but proving them can be tricky. One of the main problems in proving a verbal agreement is a lack of solid evidence.

For example, for Sylvia to collect damages after the fiasco with her neighbor Maggie, she must prove that she paid her $350 and that the two women agreed to the terms of the house-sitting deal. However, if Maggie denies that the agreement ever occurred, it becomes challenging for Sylvia to prove the terms of the deal.

Verbal contract legal cases such as Sylvia’s rely on the fact that one or both individuals are clear about the terms of the deal. Oral agreements work best when they are defined by concise terms and supported by evidence. If Sylvia’s bank records show that she withdrew the $350, that element of evidence could prove helpful.

The components of all contracts—implied, verbal, and written—feature specific elements that support their validity. These include:

An offer that was extended by one party and accepted by the other party
Both parties are giving up something of value, as according to the contract
Mutual consent from both parties
An awareness of the creation of the contract and an awareness of its terms
Both parties must be of legal age and cannot be mentally impaired or disabled

In addition, if one party claims duress or fraud, this sometimes prevents the contract from being enforced.

On the other hand, there are specific elements that render contracts illegitimate. For example, an oral contract is not legally binding if:

One or both parties agreed to commit illegal acts or violate federal, local, or state laws.
The contract’s terms were unspecified or not specific enough.
There was confusion over an integral aspect of the contract.
The law prohibits the nature of the contract. For example, real estate agreements are required to be in writing under the Statute of Frauds.

Suing for Violation of a Verbal Contract

An oral contract, if valid, is an agreement binding two parties together. While it is true that some oral agreements are enforceable, it can be challenging to prove verbal contracts because often there is a lack of relevant, recorded information.

Sylvia can retain her bank records and take pictures of the condition of her house, but unfortunately, her situation may come down to a “he said, she said” type of situation. If Maggie denies, for example, that the agreement was ever made, then the case could be reduced to Maggie’s word versus Sylvia’s.

Where Do Witnesses Fit In?

Witnesses can come in handy when attempting to decipher the details of a disputed verbal contract. Witnesses can either be the contract’s parties or third parties present when the parties created the agreement.

Witnesses can provide testimonies regarding what they remember about the deal, whether they were indirectly part of it or not. Sometimes, a witness did not know they were privy to the agreement, but an accurate and unbiased testimony can quickly change the case’s outcome.

Many breach of contract lawsuits in California turn into a frustrating battle between two parties because many oral agreements are hard to legitimize without evidence. Suppose another neighbor or friend had witnessed the agreement between the two women; for example, that testimony could provide evidence for Sylvia’s case. If Sylvia had drawn up a written contract detailing the terms of the agreement or contacted a contract attorney to do so, she would be in a much more favorable position regarding the settlement.

What Proof is Considered Relevant?

Sylvia must prove that the agreement between herself and Maggie existed and that the two women agreed to the terms of the deal. The existence of proof is often the deciding factor in cases of disputed oral agreements, but options are available. Proof comes in many forms, and these include:

Evidence of one party’s performance of services in accordance with the contract
Proof of financial exchange under the terms of the deal
Evidence of payments or loans
A check or money order
Witnesses of the deal

Additionally, the court may examine the documentation of the verbal contract, and this can come in many forms:

Texts

Emails
Invoices
Bank Statements or Credit Card Statements
Letters

Additional documentation

Verbal contract cases are challenging and complex based on various elements and often lack written documentation. As a result, businesses and individuals such as Sylvia often turn to a breach of contract attorney for expert help with the disputed oral contract. An experienced contracts attorney will listen to the details of the case, gather available evidence, and then pursue the plaintiff’s claim.

What is the Statute of Frauds?

The Statute of Frauds dictates that certain situations require a written agreement to be considered valid. This distinction means that oral contracts are illegitimate if they focus on:

Transferring land ownership
Contracts that extend past a year
Marital agreements
Debts of individuals
Executing a will
The sale of goods above a certain monetary amount.

Additionally, the Uniform Commercial Code (UCC) directs contracts involving the sale of goods.

What Defines the Statute of Frauds in California?

In California, the Statute of Frauds lists the types of contracts that, to be enforced, must be written or recorded. These contracts include agreements for:

The sale of personal property for more than $5,000
The sale of real estate
A contract that cannot be finished in one year (for example, a job lasting 18 or 22 months)
A service that is unable to be performed during the lifespan of the person who promises to perform it
A property mortgage
Lending over $100,000 or providing the same amount of credit, not used for household, family, or individual expenses
A sale of goods over $500
A real estate sale or lease for longer than a year involving an agent or broker as a third party
Answering the debt or default of another person

What is the Statute of Limitations in Contracts?

The statute of limitation is the time frame during which one party or business must file a lawsuit against the other party when a contract is violated.

Oral contracts generally feature a briefer statute of limitations time limit compared to written agreements, based on the lack of evidence and witness testimonies.

Following our hypothetical example, Sylvia contacted an experienced contract attorney. However, seeing as her house was a mess and her mail and the cat were lost, she felt she had no choice.

Thanks to a series of text messages between Sylvia and Maggie, Sylvia was able to win the case. The messages spelled out the terms of the agreement and showed that Maggie had accepted not only the deal but the money Sylvia paid her. As a result, Sylvia could collect the $350 plus additional damages, and she was delighted when her cat Pepe returned the next day.

Contact a licensed attorney if you need help with a breach of a verbal contract. Figuring out the logistics of a violated oral contract can be challenging, and proving the details can be difficult and time-consuming. However, a skilled contract attorney can help both parties identify the case’s relevant details and come to an organized, rewarding conclusion.

When Should Individuals Contact an Attorney About Verbal Agreements?

The law firm of Nakase Wade understands the often challenging nature of verbal agreements and has helped many clients make sense of their oral contracts in the past.

While it is true that some verbal agreements hold up in court, we recommend always signing written agreements, especially when the consideration is valuable. For questions about oral contracts or if you have a problem with a violated verbal contract, contact the business law firm of Nakase Wade in California.

Our skilled, insightful attorneys will be able to provide helpful advice concerning the nature of the contract, as we have handled many oral contract cases in the past. Our goal is to defend your rights as an individual or business owner.

You have rights if you entered into an oral agreement and feel the other party breached the terms of the contract. While not all verbal contracts are enforceable, many of them can be defended.

Contact Nakase Wade today for a free consultation, and let’s get started.

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