Let’s Talk Verbal Contracts – Is a verbal agreement enforceable?

Despite the common misconception that a verbal contract is not enforceable, a verbal agreement that can be proven through various forms of evidence is valid. Generally speaking, verbal contracts are legally binding and can be enforced in court. Understanding the nuances of verbal contracts is crucial to avoid costly misunderstandings and disputes.

Common Misconceptions Debunked

Many people believe that verbal contracts are not legally binding. This misconception arises because verbal agreements often lack tangible evidence, making them harder to prove in court. However, verbal contracts can be just as enforceable as written ones if they meet certain criteria. Courts often rely on witness testimony, circumstantial evidence, and records of subsequent actions to uphold verbal agreements.

Elements of an Enforceable Agreement

For a verbal contract to be enforceable, it must include the following elements:

• Offer and Acceptance: A clear offer by one party and acceptance by the other.
• Capacity: Both parties must have the legal ability to enter into a contract.
• Legality: The contract’s purpose must be lawful.

Statute of Frauds Explained

The big exception to the general rule that verbal agreements can be enforced is the contracts that are required to be in writing by the Statute of Frauds. Wis. Stat. 402.201. The following types of contracts must be in writing to be enforceable:

• Contracts for the Sale of Goods: Any contract for the sale of goods priced at $500 or more must be in writing.
• Real Estate Transactions: Contracts involving the sale, lease, or transfer of real estate must be in writing.
• Agreements Not to Be Performed Within One Year: If the performance of a contract will take longer than one year from the date the contract is signed, it must be in writing.
• Promises to Pay the Debt of Another: Any promise to pay the debt of another person must be in writing.
• Marriage Contracts: Agreements made in consideration of marriage, except mutual promises to marry, must be in writing

Oral Agreements in Court

When verbal contracts are disputed in court, the primary objective is to establish the existence and terms of the agreement. Both parties present evidence, including witness testimony and relevant documentation. The jury evaluates the credibility of witnesses and the strength of the evidence to make a decision. Proving a verbal contract can be challenging but not impossible. Here are some ways to substantiate a verbal agreement:

• Witness Testimony: Credible witnesses who were present during the meeting when the agreement was made between the parties can provide firsthand accounts.
• Documentary Evidence: Written notes, emails, and letters can support the existence and terms of the verbal contract.
• Circumstantial Evidence: Business records, industry customs, and practices can help establish the terms of a verbal agreement.

We have helped people enforce oral agreements when they felt like all hope was lost. If you have made an oral agreement and the other party is refusing to perform, you may have an enforceable agreement. Call today and speak with one of our experienced business litigation attorneys to get a free consultation.