The general answer to this question is yes, verbal contracts are legally binding in the US. They’re recognized in common law, just as written contracts are. The one main difference being that written agreements are much easier to prove and make for stronger cases.
There are specific laws, both federal and state, that can be used to enforce oral agreements. The only problem is that verbal contracts can be contested- and with success.
Verbal or oral contracts are also a risky affair. A party to an oral agreement may choose to become dishonest or fail to honor the contents of a verbal contract. In such cases, you may want to file a lawsuit, especially when such an unkept promise has resulted in some type of damage to you. To know what options you have of being able to enforce that verbal agreement, you need to understand whatever federal and state laws are applicable in the matter, and a contract attorney is likely best placed to help you in this regard.
Having said that, it should be noted, however, there may are local provisions that may affect the validity of an oral contract you enter into. These would require you to speak to a local contract attorney who would spell them out to you, and advise you on what to do.
Elements of a Valid Contract
For any contract to be valid, it has to contain several elements. These are;
- An offer
One party should be offering something, and with accompanying conditions. The offer has to be clear and unambiguous for it to be considered legally enforceable. If it creates doubts as to what’s being offered and under what terms, proving the agreement may be difficult
- Offer acceptance
After the offer is presented, the other party must show acceptance. The conditions of acceptance also need to be those carried by the offer, otherwise, that may form a basis for a contract dispute
This refers to the mutual agreement for the exchange of goods, services or rights. One party agrees to give, and the other party agrees to receive in exchange of something of value. Both parties must be aware of the requirements of the contract for it to be valid
The parties involved in the contract have specific duties they need to carry out to effect the mutual consideration. This is where the performance aspect of a verbal contract comes in
In addition to these elements, the contract needs to be of a legal nature. This means not entering into an agreement to help break the law or to do something illegal
When is a Verbal Contract Not Legally Binding
There are situations where a contract must exist in writing for it to be considered legally binding. Under The Statute of Frauds, the following arrangements cannot exist as oral agreements.
- Contracts created for sales involving amounts that exceed $500
- Contracts that take more than one year to perform
- Contracts to cover the purchase or lease of land
- Contracts for marriage contemplation
- Contracts for promises to account for another person’s debt or debts
The Burden of Proving a Verbal Agreement
As any contract attorney will tell you, verbal agreements can be hard to prove. Courts will usually depend on various sources of evidence in deciding on a case of a verbal contract brought before it. As the plaintiff, you can hinge your evidence on any form of communication with the other party. Emails or text messages would help, especially if they show activity pointing to the existence of an agreement.
Emails showing delivery and receipt of goods or services can build a strong case, same as the presence of similar business with other clients.
If you had a witness to the oral agreement, the better. A witness makes a contract without a written agreement to be almost as easy to enforce as a written one.
Oral contracts are legally enforceable in the US, but they carry a higher burden to prove in a court of law. Because you cannot always have every deal in writing, taking precautions to safeguard yourself helps.
Have a witness to your agreements that are not in writing. Make use of electronic communication methods that can be relied on in case things turn sour. They include email and text messages as they’re permissible as evidence for the existence of an agreement.
Better still, follow every oral agreement with an email. In the email, outline the nature of the contract, the conditions, and everything about it. Send it to the contractual party or parties. It will make a strong proof that there was a contract and make your side of the argument more genuine.
Because verbal contracts are difficult to enforce, it’s advisable to have your agreements in writing whenever possible. Get a contract attorney to help you draft your agreements, and things will be easy for you if the contractual parties go against the agreement.