What to Do if Someone Reneges on a Verbal Agreement

You may pursue a lawsuit when a person reneges on a valid and enforceable verbal agreement. First, determine if there is a valid oral contract. An oral contract is valid when there is evidence of an offer made, the offer was accepted, and the parties exchanged value.

Example of Reneged Verbal Agreement

Kevin and Katrina are both avid record collectors who live in Los Angeles. One day, while shopping for records, Kevin tells Katrina that he plans to propose to his girlfriend Jen, but he is unsure how he will save the required money.

Katrina offers Kevin on the spot: she will buy all of his records for $4500, which is the price of the ring he wants. Kevin says, “sounds good,” and that is that. Katrina says she will send Kevin a check, and he says he will pack everything up for her. The two old friends even shake hands.

Keven and Katrina have just signed a verbal contract to sell over 500 records. Yet, while Kevin felt good about the deal for a while, when he returned home, he began to think. Looking through his record collection, he realized it was worth at least triple what Katrina offered to pay.

Kevin knows he must renege the deal but is nervous about calling Katrina to tell her. Meanwhile, Katrina tells all her friends about the excellent deal she got on many vintage records.

When individuals create verbal contracts, there exists the possibility of one party reneging on the deal. Sometimes, individuals view a reneging of the deal as a situation to learn from. However, other people want to take legal action to pursue their deal. Others wonder if oral agreements are legally binding and, if so, what conditions must be in place to make verbal contracts valid.

How Can Oral Agreements be Proved Valid?

Focus on Three Important Questions

First, each party needs to ask three questions:

Is there evidence of a legitimate legal case?
If a judgment is won, would one person be able to collect?
Which would be more effective: mediation or a lawsuit?

Thinking about these three questions, often with the help of a qualified attorney, helps people decide whether to pursue the reneged contract or not. Usually, the answers to these questions help illustrate whether this is a moment to learn from or a chance to collect damages.

If Kevin tells Katrina the deal is off, she might not pursue the records very well. However, if she has already paid Kevin and thinks that she has a legitimate case, she could attempt to prove that the argument is valid.

It is not easy to determine whether the case is legitimate. For example, the mediation process might help maintain the friendship between Katrina and Kevin, as opposed to filing suit. Plus, collecting on a judgment that involved money—even small sums such as $4500—sometimes requires more legal action.

Analyze the Agreement’s Main Topic

Another helpful task is determining if the agreement conflicts with the Statutes of Fraud in California.

The Statute of Frauds is a law dictating that some contracts or agreements must be placed in writing to be certified “enforceable.” The Statute of Frauds often comes up when parties discuss disputed verbalized contracts.

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 service that is unable to be performed during the lifespan of the person who promises to perform it
A property mortgage
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
A contract that cannot be finished in one year (for example, a job lasting 18 or 22 months)
Lending over $100,000 or providing the same amount of credit, not used for household, family, or individual expenses

Alternate contracts may be enforceable even if the parties only recorded them verbally. However, it can be challenging to prove that the oral contract existed.

The Uniform Commercial Code is also important since it requires five specific types of contracts to be deemed enforceable in a court of law. These are:

Contracts regarding real estate
Agreements with terms that make it impossible to complete within one year
Contracts regarding marriage
Contacts involving a co-signor
Purchase agreements for goods of $500 or more

Locate Valid Evidence

One of the most common problems contract attorneys face in enforcing an oral contract is a lack of hard evidence. Even when one party can prove that the terms of the deal were performed, the deal may be voidable because it is not backed up in writing.

The circumstances of each case usually dictate whether a verbal contract is successfully enforceable. When reviewing cases of disputed verbal contracts, the following elements are useful:

The credibility of each party
Each party’s conduct, especially after making the agreement
Contact between the parties before the deal was made
How similar deals are usually made
The testimony of both parties
Witnesses’ testimonies
The credibility of both parties, or all involved parties
Any documented, written evidence

These areas help the court of law map the terms of the deal and ultimately decide if the parties breached the contract.

Katrina may not have enough authority or evidence to challenge Kevin’s actions. However, if the two had drawn up a contract to sell the records, her case would be much stronger. Similarly, if there had been a witness in the record store when they negotiated the deal, it might make sense for Katrina to pursue the deal. A court of law will always rule more favorably towards the party that produces valid evidence of the oral agreement.

What Are Implied Contracts?

Sometimes, one party relies on the promise made in an oral contract to the other party’s detriment. When this happens, the court can still certify the agreement. Usually, implied contracts occur between employers and workers termed at-will since specific contracts do not protect these workers.

When is Legal Help Needed for Oral Contracts?

After some debate, Kevin and Katrina decided to abandon the deal for the records. Both individuals were more worried about preserving their friendship than the $4500. Finally, Kevin showed Katrina the value of some of his antique records, and she understood that he had made an honest mistake.

However, not all disputed oral agreements turn out this way, especially when one party reneges on the deal. Also, many verbal contracts involve much higher stakes.

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.

Regardless of whether you have reneged on the deal or your partner has, our attorneys will be able to provide helpful advice. If you have questions about an oral contact that you are involved in or a verbal agreement you are considering, contact the law firm of Nakase Wade.

We understand the often-challenging nature of oral contracts and have helped many clients make sense of their oral contracts in the past. Contact Nakase Wade today and schedule a free consultation.

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