While some oral contracts are enforceable under the law, others are not. Many states have statute of fraud laws that govern whether a contract must be in writing in order to be enforceable. These laws require that certain types of contracts be in writing. If, however, an oral contract falls outside of the statute of frauds, then your contract may be enforceable under the law.
Statute of fraud laws set forth specific types of contracts that must be in writing in order to be enforceable. For instance, in most cases, all contracts for the sale of land must be in writing. All contracts that last one year or more, in general, must be in writing.
In other words, if it is possible to perform a contract within one year, then the statute of frauds may not specifically require the contract to be in writing. Additionally, contracts for the sale of goods worth more than a certain dollar amount must be in writing under most states’ laws. Although there are exceptions to these general rules, you may have difficulty enforcing oral contracts that are specifically required to be in writing pursuant to your state’s statute of frauds.
There are some general elements that must be present in order for an oral contract to be enforceable. First, the oral agreement must contain essential contractual terms. These terms must be sufficiently specific so that the parties can enforce the contract, if necessary. Finally, the parties cannot leave a provision out or state that they will decide on a certain provision later. All material provisions must be agreed upon at the time of the contract, rather than left open to future interpretation.
Even if an oral contract is unaffected by the statute of frauds and is legally enforceable, it still may be difficult to prove the existence of a contract. All too often, it can be one person’s word against another as to the terms of the contract, or whether a contract even exists. As a result, it is essential to have some sort of independent evidence that a contract exists. For instance, if the other party to the contract actually performed part of the contract, then his or her part performance may be evidence that a contract existed in the first place. Another type of evidence of an oral contract might be a witness to the agreement when it was made, or that part of the contract was performed by you or the other party.
Entering into business contracts can be a complex endeavor. The best practice is to always put your contracts in writing and to always have an experienced breach of contract lawyer review your contracts before signing them. This step will help ensure that your contracts are enforceable and do not contain any provisions that are contrary to the laws of your state.
If you are having legal issues in your business, contact a seasoned attorney, like a breach of contract lawyer from the Law Group of Iowa.
