Solid contracts are vital to keeping your business running smoothly. Most of your contracts are likely signed and in writing, but sometimes you may find yourself in a situation involving a verbal contract, and wonder if it is enforceable.
Yes, with some exceptions
California law states that verbal contracts are legal contracts, with a few exceptions. Contracts that cannot be performed within one year, contracts involving real estate and contracts loaning money of over $100,000 are some examples of contracts that must be in writing.
It is important to note that if you are tricked into creating a verbal contract that by law must be in writing, your verbal contract could still be legally enforceable.
You might enter a verbal contract with someone you trust, taking their word that they will fulfill their obligation under the contract and that it does not need to be in writing.
The court can take this context into consideration if the person later breaches the contract, and you realize that the contract should have been in writing. This type of behavior can be viewed as fraud, and a court can order the person to perform their part of the contract.
Express and implied contracts
Verbal contracts can be either express or implied. An express verbal contract involves specific words stated by you and the other party creating the contract, while an implied contract is one that is assumed to exist based on your conduct.
While verbal contracts are valid in California, minus the exceptions listed above, you should still try to get all your contracts in writing.
Proving a verbal contract can be tough
Just because a verbal contract is legal does not mean you will succeed in enforcing it in court. You must still prove the contract existed according to your agreed upon terms.
Without written evidence, proving the existence of a verbal contract is extremely difficult. Aside from your word, you may have no other evidence, and the entire case is your word against someone else’s.
This is why having experienced legal counsel to advise you and help resolve your contract disputes is necessary.