Key Takeaways

  • The statute of limitations for oral contracts varies by state, typically ranging from 2 to 6 years, while written contracts generally have longer time limits.
  • Oral contracts can be legally binding, but proving them in court is more challenging than written agreements.
  • The Statute of Frauds requires certain contracts to be in writing to be enforceable, such as contracts involving real estate or agreements lasting more than a year.
  • Exceptions to enforceability exist, including partial performance, promissory estoppel, and admissions in court.
  • Factors affecting the validity of verbal agreements include evidence, witnesses, reliance on the agreement, and the type of contract.
  • Statute of limitations begins to run when a breach occurs or when a reasonable person should have discovered the breach.
  • Common disputes in verbal contracts involve employment agreements, service contracts, and sales transactions.

The statute of limitations oral contract is the length of time in which a person can bring a lawsuit against another party for a breach of oral contract. Keep in mind that an oral contract is not the same as a written contract. While a written contract is an agreement that is made in writing between two parties, an oral contract is a verbal agreement. Written contracts are always legally binding, so long as all of the elements of a contract are met and no other illegalities or unconscionability claims have arisen. Oral contracts, however, aren’t always legally binding. It is generally binding if one party proves the tangible evidence of the spoken agreement along with reliance on the performance of the other party.

Statute of Limitations: An Overview

Every state has its own unique laws with regard to the statute of limitations on legal suits. The statute of limitations is a law that provides specific information as to how long one can wait before bringing a lawsuit against another party. This law is in effect for many reasons, including the following:

  1. To prevent delayed lawsuits, i.e., legal suits being brought several years after an issue has arisen, i.e., breach of contract
  2. To put an end date to litigation; otherwise, legal suits would be brought at any time for any reason or another
  3. To prevent stale witnesses, as waiting longer will reduce the likelihood of a witness remembering the incident
  4. To prevent stale records, since records are generally destroyed after a certain period of time, i.e., a business might be required to keep records for a period of 5 years

After the statute of limitations has expired, the claim can’t be brought in court, even if a court would have previously found the oral contract to be enforceable.

Statute of Limitations for a Breach of Contract

Most states provide a statute of limitations anywhere between 3 to 15 years for a breach of contract. Be mindful that written contracts generally have a longer statute of limitations period, whereas oral contracts will have much shorter limitation periods. A common question would be when the statute of limitations begins to run; the answer to this is that the period will begin to run when the circumstances and facts regarding the case have reached a level in which a legal action could arise, i.e., breach. Therefore, it doesn’t matter when the breach was discovered, as the period will begin running when someone either knew or should have known that an action could be brought.

If you have an oral contract dispute that you want to bring in court, it would be a good idea to speak to an attorney who can assist in the claim and provide additional information regarding the statute of limitations. Some states have different limitations depending on the type of oral contract. There are usually separate laws for recovering on debt, mortgage breaches, or other similar types of oral contract legal disputes.

Factors Influencing the Statute of Limitations for Oral Contracts

The statute of limitations for oral contracts is not uniform across states and is influenced by several key factors, including:

  • Nature of the Agreement – Some contracts, such as those involving real estate, may not be enforceable unless in writing due to the Statute of Frauds.
  • Jurisdiction – Each state has its own laws governing time limits for legal action. For instance, California has a 2-year limit for oral contracts, while New York allows 6 years​.
  • Discovery Rule – In certain cases, the clock may start when the breach is discovered rather than when it occurred.
  • Defendant’s Actions – Fraudulent concealment or misrepresentation by the defendant can pause the statute of limitations, allowing an extension to file a lawsuit.

Understanding these factors can help in determining whether an oral contract is still legally enforceable.

Statute of Frauds

The doctrine of the statute of frauds is distinct from the statute of limitations, as it requires that certain types of contracts be in writing in order to be legally enforceable.

The statute of frauds is simply a remedy that the court can offer as opposed to determining the actual validity of a contract. Therefore, this doctrine will not state whether or not the contract is in fact valid by meeting all of the necessary contractual elements. Rather, it will be used in court as an affirmative defense to a lawsuit that seeks enforcement of the oral contract by indicating that the contract isn’t enforceable since it should be in writing based on the statute of frauds.

Specifically, certain state laws require that some contracts be in writing in order for the state to legally recognize it. For example, most states provide that for the sale of land, the contract must be in writing. However, oral leases that exist for a period of one year or less can be oral. The statute of frauds also states that an oral agreement that is entered into subsequent to the written agreement can cancel out the prior written contract.

Exceptions to the Statute of Frauds for Oral Contracts

Although the Statute of Frauds requires some contracts to be in writing, there are notable exceptions where an oral contract may still be enforceable:

  1. Partial Performance – If one party has already fulfilled part of the contract, such as paying for goods or services, a court may uphold the oral agreement.
  2. Promissory Estoppel – If one party reasonably relied on the agreement to their detriment, the court may enforce the contract to avoid injustice.
  3. Admissions in Court – If the defendant admits in court that an oral contract exists, the judge may uphold it despite the lack of a written document​.
  4. Customary Transactions – In certain industries, particularly small business dealings or informal services, verbal agreements may still hold weight.

These exceptions provide important avenues for enforcing oral agreements that otherwise might not comply with written contract requirements.

Proving the Existence of an Oral Contract in Court

Since oral contracts lack a written record, proving their existence can be difficult. Courts typically rely on the following evidence:

  • Witness Testimony – Individuals who were present during contract discussions can testify to the agreement’s terms.
  • Written Communication – Emails, text messages, or notes referencing the agreement can serve as supporting evidence.
  • Actions Taken by Both Parties – If both parties acted as if a contract was in place (e.g., partial payments made, services rendered), this can help prove its existence.
  • Circumstantial Evidence – Statements, past dealings, and documented interactions can demonstrate an implied agreement.

Given the complexities of proving an oral contract, seeking legal advice is highly recommended before pursuing a lawsuit.

Frequently Asked Questions

1. How long does a verbal agreement last before it expires?The duration varies by state but typically ranges from 2 to 6 years, depending on local statutes of limitations for oral contracts.

2. Can an oral contract be legally enforced?Yes, if the contract meets basic legal requirements (offer, acceptance, consideration, and mutual consent) and does not fall under the Statute of Frauds.

3. What types of contracts must be in writing?Contracts for real estate, debt repayment, goods over $500, and agreements lasting more than a year generally require written documentation.

4. What evidence can prove an oral contract in court?Courts consider witness testimony, emails, text messages, payments made, and past dealings as potential proof of an oral agreement.

5. What happens if the statute of limitations expires?Once the statute of limitations expires, you lose the right to sue for breach of contract, even if the agreement was valid.

If you need help learning more about the statute of limitations on an oral contract, or if you want to find out if your oral contract is enforceable, 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.