1. What Is an Oral Contract?
2. What Are the Elements of a Contract?
3. Are Verbal Agreements Binding?
4. Enforceability of Verbal Agreements
5. Proving the Contract
6. What is the Statute of Frauds?

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:

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:

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.

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 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

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