About PA Verbal Contract Law

The Offer

An offer is an objective process of intent to be bound by an agreement. For example, when you're shopping, you place an item on the checkout counter and present your credit card. That may suffice as a contract. On the other hand, asking the cashier if they will take $500 for the item versus the actual price of $600 does not constitute a contract.

The Acceptance

An acceptance is when the offer is accepted via communication that specifies an intent to be bound that is consistent with the offer. Using the shopping experience as an example, if you place an item on the counter and the sales clerk goes outside and places a note on your vehicle stating they accept your offer, it is not a contract since you needed to know if the offer was accepted before leaving the store.

When you placed the item on the checkout counter and presented your credit card, however, it was implied the offer was accepted by scanning your card. While this may seem confusing, a court would look at the objective implication of the conduct of the parties involved.

In Pennsylvania, a contract does not need to be in writing for it to be considered valid. This can lead to confusion when one party thinks a contract is in place and the other party disagrees that no agreement/contract exists. In addition to misunderstandings between the parties, the addition of emails and texts play a role requiring the courts to determine and resolve if these methods constitute a contract.

The Consideration

A unilateral contract is unenforceable since it means only one party has the responsibility to do something. For example, promising a gift is not enforceable. For the contract to be enforceable, both parties must have something specific to exchange. This could be anything from a promise for a promise or a service provided or something in exchange. When this happens, it is referred to as consideration. Agreeing to pay $10 for a new car is a consideration if that is the intent of the seller.

Exceptions exist in most cases, and a claim may exist for detrimental reliance or "promissory estoppel" even if the consideration is lacking and one party has relied on a promise that proves to be detrimental. In this case, the relying party had the option to sue but only to the extent of his or her reliance.

An example would be when one party promises to give their car to another party. Based on that promise, the receiving party donates their car to a charity based on reliance. In this case, the party promising the car may be liable for the cost of replacing the second party's car if the promise is broken.

In the event a contract does not exist, if one party unjustly enriches another party by doing something, there may be a claim for the amount of the enrichment. In this example, a contractor builds a garage at the wrong address. Obviously, he has no contract with the property owner. The garage, however, increases the property value. The contractor may have a claim for unjust enrichment if the court deems that fairness is required.

Reasonably Specific Terms

Agreements must include essential terms that all parties have agreed to. Essential terms are specified depending on the nature of the transaction. For example, when buying a car, the price is considered an essential term. A court may imply non-essential terms regarding the intent of the parties but not the essential terms.

Types of Contracts

There is a difference between oral contracts, which are sometimes referred to as "verbal contracts" or "verbal agreements." An oral contract means it is spoken. A verbal contract can be anything that involves words or is verbalized. Verbalized can be through speech or writing.

Contract types include:

  • Service contracts such as agency agreements or car washes.
  • The sale of goods that are not part of the Uniform C Code (UCC).
  • Lawsuit settlements.
  • Landlord-tenant leases.
  • Agreements that may be performed within a year.

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