Are Verbal Contracts Enforceable?

Yes, however, they are more challenging to prove.

Introduction to Verbal Contracts

A contract is formed when two or more parties have (a) an offer, (b) manifested acceptance of the offer, and (c) consideration (money or giving up a right). If a verbal contract contains all of these elements, it can be enforceable in court. Absent a complaint for a declaratory action (judicial recognition of a contract), the claim will be for breach of contract, meaning the moving party must also show the failure of the other party to do some material part of the contract. 

Proving the Existence of a Verbal Agreement in Court

Without a written agreement, it is difficult, but not impossible, to show offer, acceptance, consideration, and breach. The parties must rely on their memory about the interaction(s).  The parties will be asked to testify about their knowledge of the agreement (or lack thereof). Usually, the parties to the litigation will be asked to sit for a deposition to explain why there was a breach of contract or why there was not. This often becomes a “he said, she said” situation where the stories do not match up. 

Why written contracts are favored

Written contracts are easier to enforce because you can show the terms of the agreement and the party’s acceptance via their signature. Without a written contract and with only conflicting testimony of the parties, the Court (and attorneys) will look at any writings they can find that support the existence or nonexistence of a contract. The writings come down to text messages, emails, receipts of payments, and bank/mobile payment statements. 

The Power of Circumstantial Evidence: Texts, Emails, and Payment Records

In the ideal scenario, there would be an email or text message that summarizes the agreement. Ex: “It was great talking to you today. To confirm our agreement, I will buy your ten unicorns for $5,000/each. You will deliver the unicorns to my house tomorrow, and I will send payment via CashApp upon delivery.” This would be amazing (and we recommend sending these if you entered into a verbal contract – the key is to send it as soon as possible after the conversation)! But it is typically not that clear. 

Case Example: The Ideal Scenario of a Text Message Agreement

Text messages and emails usually provide circumstantial evidence (i.e. indirect proof) that there was a contract. Ex: “Unicorns are great!” sent via text from buyer to seller. This shows that at least, at some point, they talked about unicorns and there might be a link. The circumstantial evidence, along with deposition or trial testimony of the parties, can prove beyond a reasonable doubt there was a contract. 

Receipts of payment and bank/mobile app statements can be clutch to proving there was a consideration. However, often these verbal contracts are handled in cash. Cash payments are much harder to track since there is no paper trail.

Finding the most enforceable contract

Written contracts with traceable payment methods are the easiest contracts to enforce while verbal contracts with cash payments are the hardest. The more documentation generated surrounding the contract, verbal or written, the easier it will be to enforce in court! 

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