People often presume that verbal agreements are not enforceable. However, as a general rule, they are. The classic difficulty is if one party seeks to back out of the agreement reached and denies that any such conversation took place. Without evidence, it's just one person's word against another, so you'll need proof that a contract was made.
There are several ways to prove the existence of a verbal contract including performance of services, proof of payment, emails, text messages and witness evidence.
Decide Whether You Made a Valid Agreement
Some types of agreements have to be made in writing. Rules vary between states but generally, you cannot orally make real estate contracts, contracts in contemplation of marriage, contracts promising to pay off someone's debt, and contracts that cannot be completed within one year. There is also a time limit for going to court to prove your agreement or to seek damages if there is a violation. Verbal contracts sometimes have a shorter time limit associated with them than written contracts because you are relying on people's memories. For example, in California, you generally have two years to file a lawsuit regarding an verbal contract versus four years for a written agreement.
Decide Whether The Agreement is Enforceable
Generally, a verbal agreement is enforceable – meaning you can compel the other party to comply with the terms of the agreement – if the following four elements are in place:
- Someone has made an offer, for example, to sell a sofa for $300.
- Another person has accepted the offer.
- Something of value is exchanged, for example cash, goods or services. This is known as consideration.
- The parties must have intended to make an agreement; they were not speaking hypothetically or joking around.
There are some circumstances in which any type of agreement, oral or written, will never be enforceable, for example, in the circumstance in which a party did not have the mental capacity to enter into a contract or in situations of undue influence.
Proving Your Verbal Agreement
The problem with verbal agreements is that the parties might have very different recollections of what was agreed. The best evidence for proving the agreement is something in writing, for example, exchanged letters, emails or text messages that spoke of the terms of the agreement. Notes you made at the time might also be helpful. Proof of payments can show that you struck some sort of deal, or you could show that you provided some goods or services to uphold your side of the bargain. If anyone else was present when the contract was made, he may be called as a witness. Witness testimony is often crucial to help the judge decide what was agreed and why.
Going to Court
If you issue court proceedings based on a verbal agreement, then a judge will consider the evidence you have presented including your own testimony. Unfortunately, judges do not have magic powers; if your evidence is patchy, then a judge may not be able to discern who is telling the truth. The court will decide this type of case using a common sense approach. If the judge determines that there is an enforceable contract, then the innocent party will usually be entitled to get back any money that is owed to her, such as the cost of finishing off services that the other party left undone.