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Are Oral Contracts Enforceable?

Two Business men shaking hands with a chain around it to imply enforcing oral contractThe answer: It depends. Let me explain. In California, some contracts must be in writing before they will be enforced by a court. However, most oral agreements are enforceable. The problem is not whether they can be enforced as a matter of law because there is no writing, but whether the moving party can prove that the agreement existed at all, since it was not reduced to writing.

This is one of the difficulties with oral contracts–the aggrieved party is often unable to carry their burden of proving the terms of the contract so the agreement is not enforceable and they walk away empty handed. When dealing with an oral contract, often the only real evidence of its existence and terms agreed to is the oral testimony of those involved, which tend to fluctuate due to differences in memory and interpretation on both sides.

Following are some types of contracts which must be reduced to writing before they will be enforced by a California court pursuant to California Civil Code §1624(a):

(1) An agreement that by its terms is not to be performed within a year from the making thereof.

(2) A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in Section 2794.

(3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.

(4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, or to lease real estate for a longer period than one year, or to procure, introduce,or find a purchaser or seller of real estate or a lessee or lessor of
real estate where the lease is for a longer period than one year,for compensation or a commission.

(5) An agreement that by its terms is not to be performed during the lifetime of the promisor.

(6) An agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust upon the property purchased, unless assumption of the indebtedness by the purchaser is specifically provided for in the conveyance of the property.

(7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of
lending or arranging for the lending of money or extending credit.

To avoid the possibility that your business agreement will not be enforced due to lack of evidence or non-compliance with California law, it is wise to ensure all important contracts are in writing and executed by the parties.

At Gehres Law Group, P.C., our business attorneys have decades of experience negotiating, drafting, reviewing, and litigating contract matters. Call us today for your free evaluation and find out how we can assist you with your contract related matter. By Tina Gehres of Gehres Law Group, P.C. © 2014 All Rights Reserved.

By | 2017-09-12T00:21:06+00:00 October 1st, 2014|Business Contracts, Contract law|Comments Off on Are Oral Contracts Enforceable?