Are Verbal Contracts Enforceable?August 6, 2024
We are all pretty used to dealing with written contracts. There are some instances where verbal agreements may apply, but are they enforceable? In some instances, verbal contracts are fully enforceable. However, there are many instances where courts have refused to enforce a verbal contract. The only way to be sure your contract is valid is to do it in writing!
Contracts like those covering wills and estates are handled by estate planning lawyers to ensure that all legalities are covered. However, given the many complexities involved in verbal contracts, it pays to learn more about them and how you should manage them.
Digging Deeper on Verbal Contracts
The issue with verbal contracts is that the terms stated should be proven by oral testimony rather than a written document, which is more transparent and precise. Unfortunately, the common problem is that people often may not have the same recollection of the agreement. In some cases, they may even intentionally be dishonest about their memory of an oral agreement.
Because it is more complex and there are no guarantees, verbal contracts take twice as long to deal with and may even cost much more to prove. For this reason, it is always best to have a written agreement rather than a verbal one. Because oral contracts are still enforceable under the right circumstances, they are harder to enforce.
Of course, there are some cases where oral or verbal contracts are prohibited. This is why it is best to speak with your lawyer to ensure the terms of your agreement are followed.
Generally, there are two (2) types of verbal contracts — express and implied. The latter are referred to those inferred by the parties’ conduct, while express contracts are verbally agreed upon.
Verbal Contract Basics and When They Are Prohibited
- In Pennsylvania, these types of contracts must be in writing:
- The purchase or transfer of real estate
- Leases for a term of three years or more
- Agreements to be responsible for someone else’s debt(s) (i.e., a Surety)
- An oral contract must have three essential elements to be enforceable:
- An offer
- Acceptance of the offer
- Consideration (i.e., a bargained-for exchange)
Challenges in Proving Verbal Contracts
One of the primary challenges with verbal contracts is the lack of tangible evidence. Unlike written contracts, which clearly document the terms and conditions agreed upon by both parties, verbal agreements rely on the memory and honesty of the parties involved. This reliance can lead to disputes over what was agreed upon. Witnesses to the conversation can help substantiate a verbal agreement, but this is often not enough to convince a court without additional supporting evidence.
Statute of Frauds
The Statute of Frauds is a legal doctrine that requires certain types of contracts to be enforceable in writing. This includes contracts for the sale of goods over a certain value, contracts that cannot be performed within one (1) year, and contracts involving real estate transfer. The Statute of Frauds aims to prevent fraudulent claims and misunderstandings, ensuring that significant agreements are documented in writing.
Exceptions to the Statute of Frauds
There are exceptions to the Statute of Frauds, where verbal contracts can still be enforceable. One such exception is the concept of partial performance. If one party has taken significant steps to perform their part of the contract, the court may enforce the verbal agreement to avoid an unjust outcome. For example, suppose a buyer has made improvements to a property based on a verbal agreement to purchase it. In that case, the court may find that the agreement is enforceable despite the lack of written documentation.
Oral Contracts in Employment
Verbal agreements are also common in employment settings, particularly for short-term or informal employment relationships. While written contracts provide more security and clarity, many employers and employees operate based on verbal agreements. It is important to note that even without a written contract, employees still have rights under labor laws, and verbal agreements regarding employment terms, such as wages and working conditions, can still be enforceable.
Preventing Disputes with Verbal Contracts
It is crucial to take certain precautions to minimize the risks associated with verbal contracts. First, whenever possible, convert verbal agreements into written contracts. A simple written note or email summarizing the agreed-upon terms can provide a valuable record. Second, document any actions based on the verbal agreement, such as payments or work performed. Third, involve witnesses when discussing important verbal agreements and ensure they understand the terms discussed.
The Bottom Line: Work With a Reputable Lawyer
Of course, these are only surface levels of the law, and speaking to an experienced lawyer is recommended to ensure that all legalities regarding your contract are in check. This way, you can prevent fraud, issues, and penalties that may arise in court.
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If you are looking for a reputable lawyer in Harrisburg, PA, contact us today!
