Can I Enforce An Unwritten Contract?

The Trouble with Oral Contracts by Lesly C. Longa, J.D.

I am often asked, “can I enforce an oral contract?”  The answer is: it depends.

Oral contracts are agreements that have been spoken, but not written.  Some people refer to them as “verbal” contracts, but really any contract, written or spoken, is verbal.  Oral contracts are not illegal, but they cause problems.  The biggest problem with an oral contract is that they cannot always be proven or enforced when it matters most because there is nothing in writing.  Proof of oral contracts typically centers on the conflicting testimony of the parties involved.  If one of the parties is not able to establish by a preponderance of evidence that his or her version of the contract is the correct one, then the oral contract may be considered nonexistent. 

I am not sure if a handshake or someone’s word is worth quite as much as it used to be.  Even among friends, family, and business associates, the details of an oral agreement may get fuzzy.  One party to the contract may remember things differently than another.  Remember playing the telephone game as a kid? 

The best practice is to get an agreement in writing to avoid disputes and lawsuits.  A written contract generally functions as a safeguard against subsequent misunderstandings and potential disputes over specific responsibilities or terms.   The contract will help ensure that everyone understands their rights and obligations under the contract.

Also, there are some contracts that must be in writing pursuant to the Statute of Frauds, such as contracts related to the sale of real estate or contracts that cannot be performed within one year.    Here is my short list of when to use a written contract (note that this list is not exhaustive):

• Sale of Land
• Purchase of real estate
• Leasing real estate
• Hiring independent contractors and employees
• Terminating employment
• Buying goods or services
• Providing goods or services
• Starting or investing in a new business
• Selling your business
• Creating a partnership or joint venture
• Ensuring confidentiality and non-competition
• Answering for the debt of another
• Providing loans or financing (even if it’s to family or close friends)

This is general information.  For specific legal advice, speak with an attorney.

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