Despite popular belief, oral contracts are enforceable. They usually are not in your best interests, and end in a "he said, she said" battle. But as long as there is enough evidence, a court will enforce an oral agreement.
However, there is one particular exception to this rule, and it's called the Statute of Frauds.
The centuries-old law is designed to prevent deceitful conduct when contracts have high stakes or long durations.
As adopted in most states, the Statute requires a written contract in the following situations:
- Real estate sales
- Real estate leases lasting longer than one year
- Transfers of property at the owner's death
- Agreements to pay another's debt
- Contracts that necessarily take longer than one year to complete
- Contracts that last longer than a party's life
- Contracts for over a certain amount of money (differs by state)
A court generally will not enforce oral contracts if they fall into one of these categories. There must be some sort of writing signed by both parties.
As expected, there are also exceptions to the Statute of Frauds. Even if an oral contract falls within its terms, it will still be enforced if:
- One party partially complied with its terms; or
- The plaintiff relied on the defendant's promise and suffered some detriment as a result.
Again, a plaintiff bears the burden of providing such evidence.
Contract law clearly doesn't favor oral contracts. They're difficult to prove, and often form the basis of fraud. So the next time you make an agreement, get it in writing.
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