Are Oral Contracts Enforceable?

The answer to the question "Are oral contracts enforceable" can be yes or no. Let me explain. In California, some contracts must be in writing or a court will hold them unenforceable. But for any other oral agreement not reduced to writing, the aggrieved party must be able to prove that there was a meeting of the minds and the parties agreed on the material terms of the contract before they may recover damages against the party who breached the contract. This is one of the difficulties with oral contract--the aggrieved party is often unable to carry their burden of proving the terms of the contract so the agreement is not enforceable.

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.

While most oral agreement can be enforced if the terms can be proven by a preponderance of the evidence, in the state of California, California Civil Code §1624(a) requires the following types of contracts be in writing:

(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 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 business related matter.

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