Key Takeaways:

  • A verbal agreement can be legally binding in North Carolina if it meets the essential contract elements: offer, acceptance, and consideration.
  • Certain contracts must be in writing under North Carolina’s Statute of Frauds, including real estate transactions and contracts exceeding one year.
  • Enforcing a verbal contract in North Carolina can be challenging, requiring proof through witnesses, communications, or conduct demonstrating the agreement.
  • Courts may imply contracts in certain situations based on conduct (e.g., implied-in-fact contracts).
  • Remedies for breach of a verbal agreement can include monetary damages or specific performance, depending on the nature of the contract.
  • While verbal contracts can hold up in court, written agreements offer stronger protection and clarity.
  • Consulting an attorney can clarify whether a verbal agreement is binding in North Carolina and how to enforce it.

A legally binding contract between two parties helps to avoid disputes between individuals or businesses. The first step in drawing up a contract is for the parties to discuss and negotiate the terms that they require. The final document will then stipulate the requirements and obligations from each party's side.

While a contract does not need to use any specific language in order to be legally binding, the courts will usually interpret the terms in the simplest possible way. It is important that both parties take the time to think about what they need from the contract and draw up the terms and conditions accordingly.

How to Draw Up a Legally Binding Contract

Here are the steps that should be undertaken when drawing up a contract:

  • Look over the notes that you took during discussions with the other party. Get clarification on any points that you are not sure about.
  • Start compiling the agreement. Make sure that each party is named in the first paragraph.
  • Include any definitions that are necessary. For example, if you are going to use the words “Work Product” several times, then the specific meaning of these words should be stated at the beginning of the contract.
  • Make sure that important details, such as payment terms, timelines for performance, and the contract's duration are included.
  • Define what the agreement is about and lay out each party's requirements and obligations clearly. This includes the services that the parties are expected to provide and any specific amounts of money that are required to be paid by a specific date.
  • Any protective language that is needed must be included. This includes clauses related to limited liability, which is often mutual. The contract should protect any confidential information relating to both parties.
  • The contract should also specify that the parties are not in competition and that neither may solicit the other's employees.
  • Relevant “boilerplate” information must be included, as well as lines for both parties' signatures.
  • A series of generic provisions are usually included, such as both parties' addresses and an entire agreement clause, which specifies that the contract covers everything that has been discussed.
  • The contract must stipulate whether rights and responsibilities are allowed to be assigned.
  • Finally, the contract must be signed and countersigned. When each party signs the agreement, they indicate their acceptance of all the terms it contains.

Key Considerations When Drafting Oral vs. Written Contracts

While verbal agreements can sometimes be legally binding in North Carolina, drafting a written contract is often the safer and more enforceable option. Here’s why:

  • Clarity: Written contracts minimize the risk of misunderstandings by documenting the terms agreed upon.
  • Proof: A written document serves as concrete evidence in case of disputes, whereas verbal contracts rely heavily on memory and witness testimony.
  • Complexity: For complex agreements involving multiple obligations, deadlines, or large sums of money, written contracts can outline these specifics more clearly.
  • Legal Requirements: Certain types of contracts, such as those involving real estate or lasting over a year, must be in writing under the North Carolina Statute of Frauds.
  • Modifications: Any future amendments to the agreement are easier to track when there is a written record.

While verbal agreements may work in simple, low-stakes transactions, significant business dealings or personal agreements involving valuable property should generally be formalized in writing.

Legally Binding Contracts In North Carolina?

In the state of North Carolina, a legally binding contract empowers a party who has been wronged to claim damages in court based on the basis of a breach of that contract. This contract can be in written form or can have been made verbally. It must constitute an agreement, promise, memorandum of understanding, lease, or settlement between the parties.

In this particular state, a contract must contain three specific elements in order to be legally binding. Firstly, one of the parties must make the offer of a product, action, or service to the other party. The second party must agree to compensate the first party with something of value. Thirdly, an agreement that can be defined as reasonably fair must be reached between the two. This is implemented by North Carolina courts to ensure that there is never a case in which one party agrees to an abusive contract.

Is a Verbal Agreement Binding in NC? Legal Standing and Enforceability

Verbal agreements can be binding in North Carolina if they fulfill the core elements of a contract:

  1. Offer: One party proposes specific terms.
  2. Acceptance: The other party agrees to those terms.
  3. Consideration: Each party provides something of value (e.g., money, services, or goods).

However, North Carolina law requires certain contracts to be in writing under the Statute of Frauds, including:

  • Contracts for the sale of real estate.
  • Agreements lasting more than one year.
  • Promises to pay another person’s debt.
  • Sales of goods over $500.

If a verbal contract does not fall into these categories, it can still be enforceable. However, proving its existence often depends on supporting evidence like:

  • Witness testimony.
  • Emails, text messages, or letters referencing the agreement.
  • Proof of performance, such as services rendered or partial payments.

Given the challenges of proving verbal contracts, individuals and businesses should consider formalizing their agreements in writing whenever possible.

Cases In Which Verbal Contracts Are Not Valid

In most cases, verbal contracts are treated the same way as written contracts in North Carolina. However, it is important to note that in certain cases, a verbal contract will not stand up in court. These include the following:

  • Contracts relating to the lease and sale of land.
  • Business loans with a value greater than $50,000.
  • Commitments to paying off debt that has already been discharged due to bankruptcy.
  • Selling items worth $500 or more.
  • Offers to pay off a third party's debt.

The fact that a verbal contract is valid under North Carolina law does not necessarily mean that the courts will enforce it. The aggrieved party will need to have proof that a verbal contract was in place. This proof could take the form of witnesses, phone records, emails, or letters. If a contract was signed or verbally agreed to due to one party being put under pressure, it will not be binding in the state of North Carolina.

Proving a Verbal Agreement in North Carolina

When a dispute arises over a verbal agreement in North Carolina, the burden of proof falls on the party seeking enforcement. Since oral contracts lack a paper trail, evidence becomes crucial. Courts may consider:

  • Witness Testimony: Individuals who were present during the agreement’s formation can corroborate its existence.
  • Communications: Text messages, emails, or even voicemails indicating the agreement and its terms can strengthen a claim.
  • Conduct: Actions that align with the terms of the agreement, such as partial payment or performance, can imply that a contract existed.
  • Documents Referring to the Agreement: Any written notes, invoices, or receipts referencing the verbal contract can be valuable.

Courts may also consider implied-in-fact contracts, which arise when parties act in a way that suggests a mutual agreement, even without explicitly stating it. This is common in business relationships where one party performs services expecting compensation and the other accepts the benefit.

Due to the evidentiary challenges, individuals questioning whether a verbal agreement is binding in NC may benefit from legal guidance on gathering proof and presenting their case.

Remedies for Breach of a Verbal Agreement

If a party breaches a verbal agreement in North Carolina, the non-breaching party may pursue several legal remedies:

  1. Monetary Damages: The most common remedy involves compensation for financial losses resulting from the breach.
  2. Specific Performance: In rare cases, a court may order the breaching party to fulfill their obligations if monetary compensation is inadequate.
  3. Restitution: If one party provided services or payments based on the agreement, the court may order repayment or reimbursement.
  4. Quantum Meruit: This remedy allows a party to recover the value of services rendered if the other party accepted the benefit without fulfilling their promise.

Legal action can be complex, especially when proving a verbal contract. Consulting an attorney experienced in North Carolina contract law can clarify available options and strengthen a claim.

Frequently Asked Questions

1. Is a verbal agreement binding in NC for a business transaction? 

Yes, a verbal agreement can be binding in North Carolina for a business transaction if it meets the essential contract elements—offer, acceptance, and consideration. However, certain agreements, such as those involving sales over $500, may require a written contract.

2. What evidence can I use to prove a verbal contract in North Carolina?

Evidence may include witness testimony, emails, text messages, receipts, or conduct showing that both parties acted according to the agreement’s terms.

3. Can I sue someone over a broken verbal agreement in North Carolina? 

Yes, you can sue for breach of a verbal agreement in North Carolina if you have sufficient proof. Courts will consider supporting evidence like communications and witness accounts.

4. What types of agreements must be in writing under North Carolina law? 

Contracts involving real estate, agreements lasting more than one year, promises to pay someone else’s debt, and sales of goods over $500 must typically be in writing.

5. Should I still get a written contract if a verbal agreement is binding?

Yes, a written contract is always advisable as it provides clear documentation of the terms and is easier to enforce in court. Legal professionals on UpCounsel can assist in drafting and reviewing contracts tailored to your needs.

If you need help with a legally binding contract between two parties, 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 companies like Google, Menlo Ventures and Airbnb.