Enforcing Oral Contracts
Contracts affirm all kinds of business transactions. In their written form, contracts should be drafted and reviewed carefully before being finalized. Some business agreements, however, are based upon verbal interactions and sealed with a handshake. While these agreements tend to be less formal or thorough than a written contract, they can still come up in legal disputes. But are oral contracts are not necessarily enforceable within the law.
The effectiveness of an oral contract as a legally binding agreement relies on a few different things. There are some contracts that must be in writing, including:
- Contracts for the purchase or sale of goods that are worth more than $500
- Contracts that require more than one year for performance or fulfillment
- Contracts for the sale or purchase of real estate
- Contracts that guarantee the payment of another’s debt
These categories are standard according to contract law. There are a few other conditions under which an oral contract may be seen as legitimate. For example, if a contract covers a term longer than a year with an indefinite end date. Also, if you have already upheld your end of the agreement the court may act in your favor in enforcing the oral contract. Lawyers specializing in contract litigation will help you to determine whether your agreement can be enforced and prevent losses and liabilities.
Though the law only requires certain contracts to be in writing, it is good practice to write down and sign any business agreement. Having an agreement in writing will make it easier to enforce if the other side fails to fulfill their responsibilities or goes back on their word in any way. A written contract specifies the exact details of an agreement, some of which may fade in the mind of a signee over time. Though oral contracts may be enforceable in certain scenarios, it is always easier to have an agreement in writing.
