Key Takeaways

  • Verbal Contracts Are Legally Binding: In Oklahoma, verbal agreements are enforceable if they meet specific legal criteria, though proving them in court can be difficult.
  • Statute of Frauds Limitations: Some contracts, such as those involving real estate, lasting more than a year, or sales over $500, must be in writing.
  • Enforcement Challenges: Without written proof, verbal contracts rely on witness testimony and other evidence, making enforcement challenging.
  • Business Contracts: Businesses can enforce oral agreements, but written contracts provide stronger legal protection and clarity.
  • Construction & Service Agreements: Verbal contracts in construction or service-related agreements may face scrutiny if performance disputes arise.
  • Silent, Implied Contracts: Certain contracts can be formed without spoken or written words based on actions taken by the involved parties.

Oklahoma verbal contract law states that a contract is formed when two or more parties agree to perform or refrain from performing an act in exchange for something of value. A contract can be formally written, casually written, or completely verbal. When one of the parties in the contract doesn't act as agreed, it becomes a breach, and remediation is available under the law to resolve the differences.

Verbal or Written?

While a verbal contract between parties is legally binding, documenting the terms in writing reduces the risk of a breach and provides greater clarity regarding the contract’s provisions. The contract's terms are the details, like who does what, where and when each party involved will perform, and how each party will go about executing the contract. A verbal contract is harder to take through the court system, though, unless several people were present to witness when the contract was affirmed.

The Importance of Written Evidence in Verbal Contracts

Even though verbal contracts are legally binding in Oklahoma, written agreements are generally preferred due to their enforceability in court. In the absence of written documentation, proving the existence and terms of a verbal agreement relies on:

  • Witness Testimonies: Third parties who were present when the agreement was made can testify in court.
  • Correspondence Records: Emails, text messages, and voicemails referencing the agreement may serve as supporting evidence.
  • Past Business Dealings: A history of transactions between parties may establish the contract’s credibility.
  • Performance of Obligations: If one party has already performed under the agreement (such as delivering goods or services), it strengthens the case for enforcement.

To reduce disputes, parties should document agreements in writing whenever possible.

Types of Contracts That Must Be Written

Under contract law in Oklahoma, there are certain types of contracts that have to be written to be enforceable. These types of contracts must be in writing:

  • Contracts that show interest regarding real property.
  • Contracts for leasing real property for terms longer than one year.
  • Contracts that can't be completed within a year under the terms given.
  • Contracts for selling or buying high-value items that have a value of $500 or higher.

Verbal Contracts in Business Transactions

Oklahoma businesses often use verbal agreements in transactions, but written contracts provide better protection. When enforcing a verbal contract in a business setting, courts examine:

  • The Nature of the Agreement: Some business contracts require written documentation under Oklahoma’s Statute of Frauds.
  • Industry Standards: Certain industries, such as real estate and finance, have stricter requirements for written contracts.
  • Payment and Delivery Terms: Courts may consider partial performance, invoices, or payment records as proof of agreement.
  • Intent to Be Bound: If both parties acted as though they were under a contract, the court may recognize its validity.

To minimize disputes, businesses should document agreements in writing, even for seemingly minor transactions.

Contracts That Take More Than a Year

Contracts that take over a year to complete must be in written form, and the terminology can be confusing. Consider the example of someone being offered a job for life. This would not be classified as a contract exceeding one year because the individual’s lifespan is uncertain, and their passing would fulfill the agreement’s terms. To be a contract that takes more than a year to complete, the agreement terms must be very specific in stating that completing the agreement will take more than a year.

Important Contract Terminology

Some important contract terminology to understand includes:

  • Mutual agreement: Under mutual agreement, every party involved in the agreement has to understand the terms and know the key points and assumptions associated with it.
  • Capable of contracting: This means that all parties involved are of legal age and not mentally impaired, legally incapacitated, or otherwise unable to enter into a binding contract.
  • Voidable: If a contract is made, and it turns out that one or more of the parties is not capable of contracting, the contract becomes voidable.
  • Lawful purpose: Lawful purpose means illegal activities cannot be contracted for, and the means to complete the contract can't be illegal.

Legally Binding Verbal Contracts

Verbal contracts are usually honored as legally binding on the conditions they are reasonable, they are equitable, they are conscionable, and they have been made in good faith. Contracts are often thought of as legal documents that are printed out, signed by involved parties, and notarized; however, only a few types are required to be in written form under Oklahoma law. This is because oral agreements are harder to enforce. Clearly written and executed contracts are favored by the court over testimony on the terms of a verbal contract.

Challenges of Enforcing Verbal Contracts in Court

Enforcing a verbal contract in Oklahoma courts can be complex due to the difficulty of proving its existence and terms. Common challenges include:

  • Conflicting Testimonies: Without written records, disputes often come down to one party’s word against the other’s.
  • Lack of Tangible Evidence: Unlike written agreements, verbal contracts lack a clear, recorded outline of obligations.
  • Statute of Frauds Defenses: The opposing party may argue that the contract should have been in writing under the law.
  • Vague or Incomplete Terms: Courts prefer agreements with defined obligations, which are harder to establish in verbal contracts.

To strengthen a verbal contract case, parties should gather any supporting documentation and consider consulting an attorney.

Arguing the Terms of a Verbal Contract

Disputing the terms of a contract can be challenging if it is not documented in writing. If an issue goes before the court based on a verbal contract, there's a chance one of the parties might lie about the agreement's terms. It's even a possibility that all involved parties might lie about the contract's terms, which creates an impassable legal issue for the court. Even though oral contracts are hard to enforce through the court system, involved parties should make the effort to discuss how the agreement will be enforced.

Partial Performance as Proof of a Verbal Contract

One way to prove a verbal contract in Oklahoma is through partial performance, meaning one party has already begun fulfilling their obligations under the agreement. Courts may enforce a verbal contract if:

  • The party seeking enforcement has performed a significant portion of the agreement.
  • The other party knowingly accepted and benefited from the performance.
  • Failing to enforce the contract would result in unfair harm or unjust enrichment.

For example, if a contractor starts work on a project under a verbal agreement and the client refuses payment, the court may enforce the contract based on the completed work.

Silent, Implied Contracts

Some simple contracts can be completed without any written or spoken words. One example of an implied contract is buying a jug of milk when the milk is exchanged for payment. This is an implied contract because when the milk is placed at the register and money is exchanged, no words need to be spoken.

Implied-in-Fact vs. Implied-in-Law Contracts

Verbal contracts are not the only type of non-written agreement recognized in Oklahoma. Courts may enforce implied contracts, which arise from the conduct of the parties:

  • Implied-in-Fact Contracts: These are based on the parties' behavior, such as a customer regularly paying for services rendered without a formal agreement.
  • Implied-in-Law Contracts (Quasi-Contracts): Courts may impose a contract where none formally exists to prevent unjust enrichment, such as a hospital providing emergency treatment and seeking payment.

While implied contracts can be enforced, proving them often requires demonstrating a clear expectation of payment or obligation.

Frequently Asked Questions

  1. Is a verbal agreement legally binding in Oklahoma?
    Yes, verbal agreements are legally binding in Oklahoma if they meet contract requirements, but proving them in court can be difficult.
  2. What contracts must be in writing in Oklahoma?
    Contracts involving real estate, agreements lasting over a year, and sales of goods over $500 must be in writing under the Statute of Frauds.
  3. How can I prove a verbal contract in court?
    You can use witness testimony, email or text exchanges, payment records, or partial performance as evidence.
  4. Are verbal agreements enforceable in business contracts?
    Yes, but written contracts are strongly recommended for business transactions to prevent disputes and strengthen enforcement.
  5. What happens if someone breaks a verbal contract?
    If a party breaches a verbal contract, the affected party can seek legal remedies, including damages or enforcement, through the court system.

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