As Samuel Goldwyn stated in his work Goldwyn's Law of Contracts, "A verbal contract isn't worth the paper it's written on." While many agreements are enforceable even if they are not finalized as a written contract, Goldwyn meant that verbal contracts can be hard to prove, as such cases often boil down to a he-said, she-said argument.
Elements of a Contract
For a court to enforce a contract, the plaintiff must be able to show that a legally-binding contact actually exists. The University of New Mexico Judicial Education Center says that the elements of a contract are an offer, consideration, acceptance and mutuality. Consideration is what is given to form the contract. For example, one party may promise to pay money, while the other promises to provide a service. Mutuality means that there is a "meeting of the minds" between the parties. They must be on the same page when it comes to the material terms of the contract, such as the subject matter, price and quantity of any goods that are part of the contract. If any of these elements are lacking, there is no valid contract, and the court will not enforce it.
Proving Its Existence
As Connecticut attorney Hillary B. Miller explains, "Oral contracts are generally enforceable, as long as they can be proven." Miller goes on to state that "the contract can be proven through the conduct of the parties, or even by their partial performance of the contract." For example, if there is a record of payments that have been made on the contract, this is evidence that there was a contract between the parties. Witnesses may also be able to support the existence of a contract, but hearsay issues may arise. Other communications between the parties such as text messages, emails or letters also can support the legal theory that a contract had been formed.
Statute of Frauds
The Statute of Frauds requires that certain contracts be in writing in order to be enforceable. These include contracts for the sale of real estate or other interest in land, contracts for the sale of goods for $500 or more, contracts in consideration of marriage, contracts ensuring that a person will pay another's debt if he does not and contracts that are unable to be performed within one year of the contract's formation. However, there are exceptions to some of these rules. For example, a verbal contract sale of goods for $500 or more is enforceable if the buyer has accepted the goods and paid for them.
Statute of Limitations
Even if there is a valid contract, the court can still refuse to enforce it if the statute of limitations has expired. A statute of limitations is a timeline in which a lawsuit must be filed in order for the plaintiff to be able to recover. If the timeline has passed, the plaintiff's case can be dismissed. The statute of limitations for verbal contracts usually is shorter than the statute of limitations for written contracts. However, the statute of limitations can be lengthened in certain circumstances, such as when fraud is involved. States set their own statute of limitations for verbal contracts.