Does a verbal agreement hold up in court?

Can Oral Contracts Be Proven in Court?

The ability to prove an oral contract in court is essential for businesses that rely on these agreements. Written contracts are more prevalent in business, but verbal agreements can still be proven in court. But, of course, the two sides could become involved in a “he said, she said” debate, and those usually cause problems for the court due to their volatility and inaccuracy.

Our contract attorneys in Los Angeles always recommend that parties rely on some variation of written communication when creating a formal agreement. Nevertheless, oral contracts occur often and sometimes spontaneously in the fast-moving business world. Moreover, there are a few ways that verbal agreements can be proven, including tracking a “paper trail” of documents, finding witnesses, and analyzing the parties’ conduct.

Oral agreements normally feature a shorter deadline because they depend on the parties’ memories, and these memories become less reliable over time. For example, parties are only provided two years to file suit for violation of an oral agreement. For a written contract, however, parties are provided four years to file suit.

Some contracts between parties must be held in place by documented agreements, as opposed to verbal. These include contracts dealing with:

• Real estate
• Paying someone’s debt
• Marriage

Also included in this list are contracts that require more than one year to complete.

While verbal contracts are valid and will hold up in court so long as it does not violate the statute of frauds. A verbal (or oral) contract is a contract isn’t written down. A verbal agreement is legally valid provided that the basic foundations of a binding contract are in place. A verbal agreement is invalid if the parties to it misunderstood a material term or terms of the contract. To prove a verbal contract is by getting witnesses to testify that the agreement was made.

For a verbal contract to be enforceable, it must contain the components of a legitimate contract. These components are:

• Offer
• Acceptance
• Consideration
• Meeting of the Minds

The contract is considered binding if the oral contract includes these elements.

However, proving verbal contracts is never black and white. One reason for this is that there are certain contracts that, according to the Statute of Frauds, must be written down. If a verbal contract falls under the Statute of Frauds and is not written down, it is not legally binding. The second reason that verbal contracts can be difficult to enforce is that oral agreements often lack evidence. When seeking to enforce a verbal contract in court, the proof is the most important aspect of the argument. Without written documentation, verbal agreements often come down to word-of-mouth from the parties involved and can devolve into a “he said, she said” type of disagreement.

Do All Types of Contracts Have to Be In Writing?

While a contract doesn’t always need to be in writing, some contracts do.  Most contracts can be either written or oral and still be legally enforceable, but some agreements must be in writing in order to be binding. The Statute of Frauds in California what types of contract must be in writing, as well as what a written agreement must include. The statute of frauds is a law that deems certain types of verbal contracts non-binding and unenforceable without written evidence to support them. The contracts covered by the Statute of Frauds vary by state but share common topics, such as real estate deals.

The statute of fraud requires a written contract when the contract involves:

• Contracts the performance of which extends beyond one year
• Contracts in which someone assumes responsibility for someone else’s debt
• Contracts for the sale of goods worth more than $500
• Contracts involving the sale of an interest in land

How Written Documents Can Help Prove Verbal Contracts

Overall, the evidence supporting a verbal contract can include proof that either party has performed the contract’s actions. For example, if the contract was for the sale of a bicycle, a receipt showing the buyer compensated the seller for the bike could be proof of the contract. In addition, witnesses to the verbal agreement, such as someone who saw the bike exchange hands, can also help prove the deal. Lastly, any documented communications between the parties, including messages, calls, and texts, can further serve as proof of a verbal contract if the party or parties record them.

• Quotes
• Texts
• Letters
• Emails
• Faxes
• Text messages
• Notes written and dated at the time of the agreement
• Proof of payment: canceled checks, transaction statements, receipts

How Witnesses and Parties’ Actions Can Help Prove Oral Contracts

If witnesses were present when two parties agreed, they could help prove the agreement. The actions of the parties can also aid in proving oral agreements. When two or more parties enter into an oral contract, they can take steps to avoid future problems. These useful actions include:

• Acquiring receipts and quotes
• Outlining the terms of the deal on paper
• Providing a witness to the oral agreement

The Statute of Frauds in California includes contracts for:

• Personal property sales over $5,000
• Sales of real estate
• Sales of goods topping $500
• Property leases and mortgages
• Contracts that cannot be finished in a year (for example, a contract lasting 20 or 24 months)
• Real estate sales or leases lasting over a year that involve an agent or broker as a third party
• Answering the debt or default of an individual
• Services that cannot be performed during the lifetime of the individual promising to perform it
• Lending more than $100,000 or providing the identical amount of credit; not used for household, family, or individual expenses.

What Are the Elements of a Valid Oral Contract?

To be considered valid, oral contracts must contain four unique components. These include:

• The Offer

An individual must be willing to agree with another person and extend an offer to them. For example, Evan created a valid offer when he said he would sell the stereo to Marigold for $600.

In all offers, the terms must be logical, succinct, and clear. The offer does not need to include all of the details of the proposed deal, but it should contain:

• 1. The parties involved
  2. The services or goods provided
  3. When the goods or services will be provided
  4. The price

Evan and Marigold are involved, and Evan’s stereo is the item or “goods” offered. Evan offers to bring the stereo to Marigold the next day if she pays him $600, and Marigold accepts.

Sometimes the person receiving the offer replies with a new offer. For example, Marigold could have said, “I can give you $500 for the stereo,” which would have been a counteroffer.

Counteroffers can quickly occur when deals are made, and the specific language used can change the nature of the deal. This back-and-forth is another reason why oral agreements are easy to dispute but difficult to enforce.

• The Acceptance

Acceptance happens when one individual agrees to the terms of the contract proffered by the other individual. When Marigold accepts Evan’s offer, she locks herself into the contract. Often, the language used is important in cementing the deal, and people often say “I accept” or even a casual “that sounds good.” If there is a dispute, the court will analyze these words.

According to the UCC, a clear acceptance sometimes creates a binding contract, even if the agreement features additional terms.

In the case of a disputed verbal contract, often, both parties remember different versions of events. These disagreements and unreliable testimonies make it difficult to figure out exactly what happened when the parties created the verbal contract.

Evan and Marigold shook hands to signify their mutual acceptance of the deal. The handshake, a normal behavioral gesture, is a potent signal that shows two critical aspects of the deal:

• • That both parties, in this case, Evan and Marigold, approve the contract’s terms
  • That a legitimate deal has been offered, approved, and accepted

However, handshakes can also be disputed by one or both parties unless there was a witness to the deal.

• The Consideration

In the context of verbal agreements, consideration is the term for the exchange of two elements:

• 1. Something of value, such as money or a particular act
  2. The action of the offer

A contract cannot exist without consideration. For Evan and Marigold, the consideration is $600.

It is important to note that if Evan offered to give Marigold the stereo for free, and Marigold agreed to accept the bike but offered nothing in return, there would be no contract. If Evan did not give Marigold the stereo in this variation, she would have no legal path of recourse.

Consideration is a legal term implying that both parties are “giving something up” in exchange for the terms of the deal. Typically, consideration represents the exchange of money for services or goods.

• Meeting of the Minds

Essential for a breech of contract lawsuit, the “meeting of the minds” refers to both parties’ understanding and assent to the contract terms.

For example, if Evan offered to sell the stereo to Marigold for $600, but Marigold thought the “stereo” was a Bluetooth speaker, there would be no meeting of the minds, and the contract would be neither valid nor enforceable in court.

The meeting of the minds involves two additional and important distinctions. First, the content of the agreement must be legal. Second, all parties have the lawful capacity to enter into the contract. Therefore, the parties or individuals involved must not be on drugs or alcohol and cannot be minors. The parties must be mentally able to understand and agree to the terms of the deal.

When is Legal Help Needed for Oral Contracts?

If you need assistance proving a verbal contract, please contact Nakase Wade as soon as possible. We are experienced in providing consultation regarding verbal contracts and have helped many parties settle their affairs in the most favorable way possible. Our attorneys understand the nuances of oral agreements, and we help our clients find the way forward successfully every time. In addition, we offer free consultations, so contact us today to get started.