Breach of Verbal Contract: Everything You Need to Know (2024)

What Is A Breach of Verbal Contract?

A breach ofverbal contract can occur when an agreement to do something, sell something, or buy something is in place between two parties and one party fails to comply with the agreed-upon terms.

Elements of an Oral or Verbal Contract

An oral contract is a spoken agreement between parties. They are sometimes legally binding. Most commonly, the issue that arises with proving an oral contract is the lack of tangible evidence.

An oral contract legal case often relies on the fact that one or both parties are clearly depending on the agreement. Verbal contracts are best as simple agreements with easy-to-understand terms and evidence that the agreement exists.

All contracts, whether verbal, written, or implied, have certain elements to be considered valid.

• There must be an offer and an acceptance where one party proposes an arrangement and the other party accepts.
• Both parties must give something up in exchange for the contract.
• Whatever is given up must have an actual value.
• There must be mutual consent.
• Both parties must be aware that a contract is being created and they must both be aware of its terms.
• There can be no valid defense to enforcement of the contract such as a minor filing suit or a lack of mental capacity.
• If fraud or duress is claimed, this may prevent the contract from being enforceable.

Even if someone acts on your statement, it does not mean a contract is legally binding if the following applies:

1. You agreed to do something illegal. Any violation of a local, state, or federal law cannot be enforced in a contract.
2. The terms of the contract were not specified. The contract must state a specific action or amount.
3. There was a misunderstanding regarding a fundamental part of the agreement.
4. Theterms or subject of the contract, namely that it is verbal instead of written, are prohibited under law. An example would be a real estate contract, which must be in writing.

Are Verbal Agreements Binding?

A verbal agreement is a contract even though it is not in writing. Assuming the contract is valid, it is a binding agreement between two parties or businesses.

While certain verbal contracts are considered enforceable under the law, they are problematic and complicated as the amount of information often varies for each case.

The enforcement of an oral contract often leads to "he said, she said" situations that are more difficult to validate without proper evidence of the agreements.

How To Break A Verbal Contract Legally

There are times when a verbal contract needs to be broken, and it is often possible to do so legally. Not only that but approaching it in a healthy way can give you a chance to maintain a personal or business relationship.

Verbal contracts are most enforceable when they are written out, whether in emails, text messages, or other correspondence, and the terms are defined.

Thus, to legally break a verbal contract, you should do so in writing. In that correspondence, outline the terms that had been agreed upon and why you are not able to fulfill them. Ask the recipient to respond acknowledging receipt and that they understand the situation, thus relieving you of the need to fulfill the contract.

This way, should the other party attempt to take you to court, you have written evidence that you were released from the contract by that party.

Suing for Breach of an Oral Contract

If a verbal agreement is breached, it may be possible to sue the offending party and win the case. A court can legally enforce a verbal agreement assuming the right conditions are met.

The best way to win a suit for breach of contract is by avoiding the problem in the first place, by consulting with a contract lawyer and drawing up awritten contract before entering into an agreement. Having a person or multiple witnesses present can help your case and offer confirmation or proof, which will be taken into consideration if the case ever goes to court.

With verbal agreements, the court must be able to extract key terms of the agreement to enforce it, which may prove to be difficult if the two parties do not agree on those terms. The two parties may not agree that there was even an agreement in place.

The party that wants the agreement to be enforced has the difficult task of proving the terms of the agreement as well as that a verbal agreement existed.

Some options are available for one party to provide proof. These include:

• Evidence to the court of the plaintiff's performance of services called for in the contract
• Proof of any money exchange showing a deal was made
• Proof of a loan and payments
• A check written as a down payment or deposit
• Witnesses present at the time the agreement was made
• Documentation such as mail correspondence, emails, and text messages corroborating your testimony

Enforcing a verbal contract is one of the more complicated cases because of varying elements in each individual case and lack of written agreement.

If you are a business owner trying to dispute a legal case or sue for enforcement of a verbal contract, you should seek legal advice from a lawyer to review any documents or the law on oral contracts and take the specific information under more consideration.

Statute of Frauds

There are situations where anoral contract is unenforceable if it falls under the purview of theStatute of Frauds, which requires a written agreement for certain situations.

These include:

• Marriage
• Transferring the ownership of land
• Contracts that cannot be fulfilled within a year
• Ensuring the debt of another person
• Assuming the role of executor of a will
• The sale of goods above a certain value. TheUniform Commercial Code governs contracts involving the sale of goods.

Statutes of fraud do differ between states, so be sure to check your individual state’s before entering into a verbal contract.

Statute of Limitations in Contracts

The statute of limitations is the time limit in which one party must file a lawsuit against the other party to recover damages if there is abreach of contract.

In the case of verbal contracts, there is usually a shorterstatute of limitations timeframe when compared to the timeframe for written contracts. This is due to the need for fresher evidence and witness testimony to be provided.

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