Every kind of contract, from a multibillion dollar Department of Defense contract to a scribbled on piece of napkin, must meet certain requirements in order for it to be considered valid in the eyes of the law. First, there must be an offer with clearly understood terms extended by one party that is met with an unforced acceptance by another. There must be mutual assent and awareness of the creation of the contract by all parties. All parties must give something up of actual value in exchange for the contract. Proving the validity of a contract, especially of a verbal agreement, is necessary for enforcement by a court.
Verbal agreements are contracts, even though they are not set in writing. If the contract is found to be valid, a verbal agreement between parties is binding. However, verbal contracts have a few unique complications that often arise when trying to establish validity.
He-said, She-said
It can be difficult for a court to decipher the terms of a verbal agreement when the parties involved have accounts of the agreement that may differ or even contradict one another. Sometimes parties may not agree that there was even a contract to begin with. It falls on the party who is seeking enforcement to prove the terms of the contract to the satisfaction of the court.
Proving It
Possibly the most difficult aspect of enforcing a verbal agreement is proving its existence. Without a written agreement, plaintiffs must turn to alternative means to plead their case. They can provide evidence of performing services called for under the contract. They can provide proof of payments to demonstrate that there was an exchange between parties, though this does not prove the terms. If there were witnesses to the original agreement, they may be called on. Written communication between parties in reference to the services may be also be submitted as evidence.
Statute of Fraud
Certain contracts, under state law, must be in writing in order to enforce them. Contracts regarding land, marriage, and debt are prime examples of topics that may have stricter requirements of enforcement that often include requiring a written contract in order to be found valid.
Statute of Limitations
This is the time limit in which a party can file a lawsuit against another other party if there is a breach. Due to the nature of verbal contracts, which often require fresh evidence and witness testimony, verbal contracts typically have a much shorter statute of limitations than written contracts.
If you’re entering into a verbal agreement with another party, the best thing you can do to protect both yourself and your financial interests in the future is to have that agreement drawn out in a written contract, ideally with the assistance of legal professional.
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