The Basics of Verbal Agreements
At their core, verbal agreements are just like contracts: a legally binding promise to do or not do something. It’s the definitive agreement made between two parties, and if one side does not hold up their end of the bargain, it can allow the other to sue them in court. In fact, verbal contracts are very rarely considered illegal in California, so they exist pretty much on the same legal plane as a written contract. Because they are so similar, they obviously contain all of the same elements: The primary distinction between verbal agreements and contracts is that a verbal agreement is conducted verbally. It’s important to note that this does not mean that the agreement has to take place in person. If parties conduct their agreement over the phone (assuming they are within California limits), via Skype, or through any other system in which verbal communication is being utilized, this still constitutes a verbal agreement. But if all of the terms have been discussed but not agreed upon verbally, then technically it would not be a verbal contract . For example, if you negotiate a deal with a neighbor about building a fence on the border of your property, and you verbally agree to terms, this may apply. Similarly, if your aunt agrees to loan you $5,000 to help with the down payment and you exchange no formal agreement outside of this conversation, this qualifies as verbal. In addition, written contracts are not legally required (outside of certain industries or for certain agreements) in order for an agreement to be binding. However, this does not mean that the contract does not still have to meet the requirements of a valid contract, including providing adequate consideration and having parties with the legal capacity to enter into a contract. If the agreement fulfills all of these obligations, and two parties were in mutual agreement about all these terms, there is no legal reason why the contract should not still be valid and enforceable through a court of law if necessary.
Enforceable in California?
Despite traditional notions that verbal agreements are not legally binding, there are instances when oral agreements can be legally enforced, despite the absence of a written contract. California applies the basic contract formation test if a dispute arises. In order for a verbal contract to be enforced, it must arise from mutual assent (offer/counter-offer), consideration, and capacity. In California, the following rules apply: Generally, any written agreement is sufficient. However, California Civil Code section 1624 enumerates the following contracts as requiring a writing to be enforceable: While exceptions may apply, in general, the foregoing agreements need to be proven by a writing in order for them to be legally enforceable in a court of law. If an oral agreement for the sale of goods was for $500 or more, the statute of frauds requires that the contract must be in writing to be enforceable.
Enforceable Forms of Verbal Agreements
While almost any type of agreement can theoretically be established verbally, there are some types of oral contracts that are more likely to be enforced than others. There are also contracts that may not be enforced if they are not in writing. The key is to understand when and how courts will enforce oral contracts so you can determine when to put an agreement in writing for the most protection. Some of the most common types of written contracts that are generally enforceable by oral agreement include: Service agreements for landscaping, janitorial services and other employment agreements. An agreement to perform a service can be established by a verbal agreement, which is generally enforceable by courts as long as the plaintiff can prove its terms and scope. Partnership agreements. While all partnership agreements should be in writing to meet the statute of frauds for contracts enforceable in California, this does not mean that courts will never recognize an oral partnership agreement. Lease agreements. Lease agreements for renting space that will last less than a year can be established verbally. Tenants cannot be evicted without a formal written lease for a rental agreement lasting longer than a year however. Additionally, as a practical matter, it may be difficult to evict someone from a property where they have established residence for a month or more.
Common Problems With Verbal Agreements
Despite their permissibility, verbal agreements can be difficult to fulfill due to issues with proving terms. A defendant may deny the existence of the agreement or even provide false testimony to support a different version of events. Additionally, because parties’ memories are not always reliable, later discrepancies in agreed upon terms and actions may arise, creating uncertainty. If verbal definitions of breach differ, for example, enforcing a verbal agreement may require litigation. In such court proceedings, courts will often have to choose between two different versions of the agreement made under poor evidentiary conditions.
Proving the Existence of a Verbal Agreement
For verbal agreements to be upheld based on relevant California case law, there needs to be evidence of the agreement’s terms, whether from a written document, digitally delivered correspondence, a third party’s testimony, or similar proof. If a contract is breached based on a verbal agreement, consider producing a digital record (audio or video), email correspondence, or witness testimony.
Witnesses are particularly helpful when called to help build a case for enforcing an oral agreement in a California court . If you can find someone with firsthand knowledge of your contract’s terms or of its breach who is able to testify about their observations at trial, this information may help substantiate or invalidate a claim for breach of contract. The person who has price-related or contractual information through day-to-day work experience may not necessarily be an unbiased party; for instance, workers who happen to be completing their work in homes that are legally under construction and who can vouch for contract terms and a contractor’s compliance with those terms can help someone seeking to litigate or defend a breach of contract claim.
When A Written Contract Makes Sense
It’s an age of alternatives. Do we want books or tablets? Shows on cable or streaming? Paper contracts or verbal agreements? Without some guidance, it can be hard to know which of the many options we come across in our daily life we should choose. Choosing to write up a contract or to enter into a verbal agreement is an area where applying some of that guidance is important.
When it comes to formalizing an agreement between two or more parties, a verbal agreement (that is, without the terms of an arrangement or transaction expressed in a document) comes with several risks. First, it is difficult to prove the content of an agreement when there is no documentation. Memories fade, and the tendency to fill gaps in recollections with the most recent, most memorable, and most dramatic recollections can lead to differences in what each party remembers the terms of the agreement to be. If disagreements over the terms are severe, it may take formal litigation (including activities like depositions, requests for production of documents, and the like) to sift through all those memories and come up with the truth. Such litigation can be costly and time consuming.
Second, even if an agreement is reached quickly, the language of a verbal agreement (as well as the parties’ memories of it) can be easily forgotten or lost. Because missing or forgotten terms are not uncommon, parties to a verbal agreement might not have a clear sense of what consequences are triggered when certain events occur. Agreements are more likely to be honored (and less likely to result in litigation) when the consequences of their implementation are clear.
Third, a verbal agreement can create uncertainty as to whether a party has obtained all appropriate signatures complying with California law and federal law. For example, some contracts, such as a real estate purchase agreement, must comply with the Statute of Frauds, under which transfers or sales of an interest in real property must be in writing and signed by the party against whom it is sought to be enforced. Generally speaking, if an agreement must be in writing in order to be enforceable, it is not a good idea to create a verbal (unwritten) agreement.
Fresno Law Firm Assistance
Obtaining legal assistance when dealing with a verbal contract will give you the comfort of knowing that you understand your rights and obligations, as well as potential legal remedies. When entering into new contracts or preparing to go to litigation over a verbal agreement , consulting with an attorney is essential to ensuring that you are able to move forward with confidence. If you need to enforce an oral agreement or seek a legal remedy in relation to a verbal contract, working with a skilled California attorney will prove beneficial. A qualified lawyer will help you to navigate the process and give you information about your options.