Key Takeaways:

  • A breach of verbal agreement occurs when a party fails to uphold their obligations under an oral contract.
  • Verbal contracts can be legally binding, but proving their existence and terms can be challenging.
  • Essential elements of a valid contract include offer, acceptance, intent, and consideration.
  • The statute of frauds requires certain contracts, such as real estate or long-term agreements, to be in writing.
  • Enforcing a verbal agreement often relies on witness testimony, actions taken under the contract, or other forms of circumstantial evidence.
  • Remedies for breaking a verbal contract may include damages, specific performance, or rescission of the agreement.
  • Some states have additional laws impacting the enforceability of oral contracts.
  • Consulting an attorney can help determine the best course of action when dealing with a breached verbal contract.

A breach of verbal agreement happens when a party involved in a verbal contract doesn't follow through on their part of the agreement.

What Is an Oral Contract?

An oral contract is an agreement made through speech, not written down or signed. Also called verbal agreements, these contracts can be legally binding, depending on how they are formed.

It can be tough to prove breach of contract when referencing a verbal agreement because there isn't usually much tangible evidence available.

An enforceable oral contract is one that the court can impose if either party breaches the contract.

What Are the Elements of a Contract?

There are four basic elements of every contract that must be present in order for it to be considered valid. Verbal, expressed, written, and implied contracts all must include the following:

  • Offer
  • Acceptance
  • Intent
  • Consideration

The offer refers to one of the parties involved offering something in return for something else. For example, a coffee shop offers lattes in return for payment. Offers must be clear in order to create a valid contract. If the coffee shop is offering coffee with no prices, a customer could assume their own price or think it's free.

Acceptance happens when the other party agrees to the terms of the offer. If a customer in a coffee shop hands the cashier $4.50 for a vanilla latte, they have officially accepted the offer. Saying something like, "I either want a black coffee or a latte," is not acceptance. Just like the offer must be clear, the acceptance must be also.

Intent refers to the fact that both parties intended to enter into an agreement. This means that both parties are able to recognize and understand that they are forming a legally binding contract. This can also be called mutual assent or meeting of the minds. Mutual assent is not present when one of the two parties is mentally handicapped or a minor. Minors are not usually considered able to fully understand the terms of a legal contract.

The consideration in a contract is the good or service that's being traded. Without consideration, you have a gift. If a coffee shop is giving out free coffee to teachers on teacher appreciation day, this is considered a gift because the teacher isn't expected to pay for the coffee. When a customer pays $4.50 for a vanilla latte and they receive a vanilla latte, consideration has been exchanged, and the contract is complete. Consideration has to be something that has value.

Are Verbal Agreements Binding?

Many verbal agreements are considered legally binding, much like a written contract would be. As long they are valid, certain oral contracts are enforceable, even if there isn't anything put in writing. There are some unique issues that can arise with verbal contracts.

Common verbal agreement difficulties include:

Common Examples of Verbal Contracts

Verbal agreements are often used in everyday transactions and professional settings. Common examples include:

  • Freelance or service agreements: A client verbally hires a freelancer for a task without a written contract.
  • Real estate arrangements: Agreements related to renting property on a short-term basis.
  • Loan agreements: One party lends money to another with an informal verbal repayment promise.
  • Employment agreements: Hiring decisions based on verbal commitments rather than written contracts.
  • Sales of goods and services: Agreements where a seller verbally agrees to provide goods or services for payment.

While these agreements can be legally enforceable, proving their existence in court requires substantial evidence.

Enforceability of Verbal Agreements

In order to enforce a verbal agreement, the court has to see the basic terms and conditions of the agreement. When nothing is in writing, the court must rely on the testimonies of the parties involved.

If the parties are disagreeing over the terms of the contract, it can be tough for the court to fairly evaluate whether there was a breach.

The burden of proof for enforcing a verbal agreement lies with the injured party or the person trying to enforce the terms of the contract on the other.

Legal Challenges in Enforcing Verbal Contracts

Enforcing a verbal contract can be difficult due to the lack of tangible evidence. Legal challenges include:

  • He-said-she-said disputes: Without written proof, courts rely on witness testimony and circumstantial evidence.
  • Lack of clear terms: If the agreement’s details, such as deadlines, payment amounts, or obligations, were not explicitly stated, enforcement becomes more complicated.
  • Statute of frauds limitations: Some contracts, like those exceeding one year or involving property, require written documentation.
  • Memory reliability: Over time, parties may forget or misinterpret the terms of the verbal contract, leading to disputes.

To strengthen the enforceability of an oral contract, parties should gather as much supporting evidence as possible, such as emails, texts, or witnesses who can confirm the agreement.

Proving the Contract

Even before arguing that the terms of the contract were broken, the party trying to legally enforce the contract must be able to prove that it existed at all.

In order to prove a verbal contract existed, the plaintiff can show evidence of some of the contract terms. If the part of the agreement was performed and they can show evidence of that performance, that will likely help their case.

Witnesses also come in handy when proving the existence of a contract.

What Evidence Can Support a Verbal Contract Claim?

Since verbal contracts lack written documentation, proving their existence and terms requires other forms of evidence, such as:

  • Witness testimony: Statements from individuals who were present when the agreement was made.
  • Recorded communications: Emails, text messages, or voicemails referencing the agreement.
  • Partial performance: Actions taken by either party that indicate the existence of an agreement, such as services rendered or partial payment received.
  • Customary practices: If a business typically operates under oral contracts, industry standards may support the claim.

Having any of these forms of evidence can significantly improve the chances of enforcing a verbal contract in court.

What is the Statute of Frauds?

State law requires certain types of contracts to be written down in order to enforce them. This is called the statute of frauds. Contract types that must be in writing include:

  • Marriage
  • Land ownership
  • Long-term
  • Wills and trusts
  • Real estate

Remedies for Breaking a Verbal Contract

When one party breaches a verbal contract, legal remedies may be available, depending on the nature of the agreement and damages suffered. Common remedies include:

  1. Compensatory damages: The breaching party may have to pay the injured party for losses suffered due to the breach.
  2. Specific performance: A court may order the breaching party to fulfill their contractual obligations.
  3. Restitution: The non-breaching party may be entitled to recover benefits conferred under the contract.
  4. Rescission: In some cases, a court may void the contract and restore both parties to their pre-contract positions.

Frequently Asked Questions

  1. Is breaking a verbal contract illegal?
    Yes, if the contract meets legal requirements, breaking a verbal agreement can result in legal consequences, including financial damages or enforcement actions.
  2. How can I prove a verbal agreement in court?
    You can present witness testimony, emails, text messages, payment records, or any actions taken that indicate a contract was in place.
  3. Can I sue for a breach of a verbal contract?
    Yes, if you can prove the contract existed and that a breach occurred, you may be able to seek legal remedies, including monetary damages.
  4. What contracts must be in writing under the statute of frauds?
    Contracts involving real estate, long-term agreements (over one year), marriage, and transactions over a specific monetary value typically require written documentation.
  5. What should I do if someone breaks a verbal contract with me?
    Gather evidence, document communications, attempt to resolve the issue amicably, and consult an attorney if necessary to explore legal options.

If you are dealing with a breach of a verbal agreement, consulting a qualified attorney can help determine the best legal course of action.

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