Updated September 6, 2021: 

Do Verbal Agreements Stand Up in Court?

Knowing how to prove an oral contract is important in either your own business or in performing business with others. While written contracts are typically more common in business, verbal contracts can still be enforced in a court of law. Though verbal contracts are enforceable, they often have a shorter deadline to enforce them because verbal agreements rely on people's memories, which can fade over time. For example, you only have two years to file suit for violating a verbal contract, but you have four years to file for a written contract.

There are some contracts that the law requires written agreements for, including:

  • Real estate contracts
  • Contracts to pay someone's debt
  • Contracts regarding marriage
  • Contracts that may require more than one year to complete

How to Determine if a Verbal Agreement is Enforceable?

In general, a verbal agreement is enforceable but does require four factors to be true.

  • An offer has been made by a seller
  • Someone has accepted the offer
  • There has been an exchange of something of value
  • Both parties intended to make the agreement and were not joking or posing a hypothetical instance

While most written and verbal agreements are enforceable under law, there are some circumstances in which a contract can never be enforceable. All contracts are unenforceable if either party lacks the mental capacity to enter into any type of contract. Oral contracts are also invalid under a number of situations including.

  • Marriage
  • Selling goods above the state-mandated amount
  • Transferring property
  • Contracts that name an executor of a will
  • Becoming the surety for another person's debt

While oral contracts and verbal agreements have the ability to be enforced, there can be some complications. The court will be responsible for extracting all of the key points of the case to be able to properly enforce it and this can be difficult considering it will most likely be a "he said, she said" account. Since the contract is currently under dispute with both parties, the parties are unlikely to agree on what the original terms were, making it difficult for the evidence to be weighed.

How to Prove a Verbal Agreement?

When two parties disagree over a verbal agreement, it is likely the disagreement stems from misinterpreting what the agreement meant for them. To aid in your enforcement of a verbal agreement, it is best to have some form of written communication saved to help provide evidence of the exchange. Some types of communication you can utilize include:

  • Letters
  • Emails
  • Text messages
  • Texts
  • Quotes
  • Faxes
  • Notes made at the time of the agreement
  • Proof of payment such as canceled checks or transaction statements

Another way to help prove a verbal agreement is by getting witnesses who were present when the agreement was made, to testify. In addition to having witnesses and written evidence, you can also prove a verbal agreement by the actions of the parties.

When entering into a verbal agreement, there are several steps you can take to prevent future problems with enforcement such as:

  • Getting quotes and receipts
  • Writing an outline of the terms as you had understood them
  • Have a witness to the verbal contract or the handshake deal

Handshake deals still constitute an official agreement, and a number of powerful players still implement the use, such as Bill Gates and Bill Clinton. Though many deals may start as handshake agreements, they are often followed up by written documentation of the agreed terms.

Concerns of Verbal Contracts

The statute of limitations is a time limit to when a lawsuit must be filed against the other party. Be sure to consider the timing because verbal agreements have a shorter statute of limitations. The statute of frauds requires that you have writing in order to be legally binding. Having a written contract is something that will help eliminate any dishonest agreements. 

Just remember that when entering into handshake deals, the best way to protect yourself is to have a witness to the terms that were set forth, as well as the actual act of agreement. If you are relying on a handshake agreement especially one that does not have any witnesses, the next best step is to act on the contract as soon as possible.

By acting on a verbal agreement immediately, you are providing additional evidence that the deal does in fact exist and you have been in compliance on your end. In addition to acting on your claim, there are other ways to support your contract, such as maintaining correspondence about it and even drafting a simple 'thank you' letter regarding the agreement.

If you need help with how to prove a verbal contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.