Is an Oral Contract as Good as a Written Contract?

An Oral Contract is as legally binding as a Written Contract, the issue with an Oral Contract is in proving its existence. To begin, the existence of a Written Contract is fairly obvious, either there is a writing or there isn’t. An oral contract, by definition, does not have a writing to support its terms, conditions or even existence. So how can we prove that it exists? One way is to use witness testimony. If A and B enter into an oral agreement, and C and D are present at the time the oral contract is made, C and D can be used to prove the existence of the oral contract. Their testimony that they heard the terms of the agreement will be sufficient to prove the existence of an Oral Contract. Course of Conduct is another way to prove the existence of an oral contract. Let’s assume that X offers to buy a radio from Y for $50. Y accepts and hands the radio to X, who then gives Y $50. The parties’ course of conduct indicates that an oral contract existed. If the radio were defective, or if Y changed his mind, he could not say that a contract did not exist. Another example of Course of Conduct would be your typical neighborhood newspaper delivery. For the most part, the newspaper boy delivers a newspaper to you and you pay him on a weekly basis. There is rarely a written agreement with the newspaper boy to deliver newspapers. You simply tell him, “please deliver a paper to me, and I will pay you”. If the newspaper boy delivers newspapers to you for a few week, and you pay him, an oral contract exists based upon the parties course of conduct. After this time, if the papers are delivered and then you refuse to pay, you cannot allege that there is no contract. The Course of Conduct indicates that an Oral Contract exists. Credibility of the parties is another factor in proving the existence of an Oral Contract. Suppose that Patron walks into a local restaurant and orders a plate of spaghetti. When Patron orders the spaghetti, an offer is made by Patron to pay for a plate of spaghetti. When the server brings the spaghetti to Patron, an Acceptance occurs and a binding oral contract is made. Credibility comes into play where the Patron then refuses to pay for spaghetti, saying “I never agreed to pay for this, I thought it was free”. All of you can see that is an incredible statement. Should that type of matter go to court, a judge would look at the credibility of the parties in regard to the situation and likely find that an oral contract was formed. If you reconsider the spaghetti scenario, though, you can see where an oral contract would be just as legally binding as a written contract. If a lawsuit were to arise out of the patron’s failure to pay, any court in the land would find the existence of the oral contract based upon credibility. The existence of an oral contract can be more difficult to prove in a different type of scenario. Imagine a scenario with P and Q. P and Q are complete strangers. P approached Q and offers to buy a Corvette from Q for $1,000. Q laughs, and says “sure”, then drives away in the Corvette. If P attempts to enforce what he feels is a binding oral agreement, will he succeed? He will have a very difficult time proving that a contract exists. There is no writing to show the agreement. There is no prior course of dealing between the parties. There were no other witnesses to this alleged conversation. Credibility becomes an issue here, along with believe-ability. As you can see, the difficulty in enforcement of an oral contract lies in the parties’ ability to prove what the terms of the contract were. Absent proof of the terms of the contract, a party may be unable to enforce what it believes to be a firm contract. Evidence, such as witness testimony, prior dealing of the parties, course of conduct and credibility of the parties are some factors that may play into the enforcement of an oral contract. If sufficient evidence can be established that the parties orally entered into a contract, the terms of that contract will be enforced. If the proof is strong, then an oral contract is just as binding as a written one. The question at hand lies with the sufficiency of that oral evidence.

Greg Artim is an Attorney with offices located in Pittsburgh, PA. For more answers to your Contracts or other legal questions, please visit his website at www.gregartim.com

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8 Responses

  1. Thanks!! that rally helped

  2. * really :)

  3. This is the first time I commented here and I must say that you share genuine, and quality information for other bloggers! Great job.
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  4. What about this example: A general contractor with whom we have sucessfully complete several electrical projects for in the past, recently calls and asks for a quote for electrical work to be performed at another customers home. We complete the work, the general contractor called for an inspection, which it passed, and now the contractor says he has financial issues and can’t afford to pay us? Note: In the past, typically, the contractor had us deal directly with the home owner for payment, which there were a few instances in which we did not get paid. However, because of this, the contactor assured us he would be paying us directly, which he did not. Would the court lean in our favor for payment?

  5. My son married a woman in Colorado and agreed to move to Texas to be nearer to her family for a period of 2-3 years afterwhich they would return… with the family to Colorado. Now with two small children, the wife refuses to move back to Colorado and threatens divorce if my son persists. Is there grounds here to establish a breach of a binding Oral Contract? As the agreement was made in Colorado, the witnesses to the agreement are my son’s friends and immediate family members only. Thank you one and all for your kind consideration of an response. ~rich

  6. I had someone call me and ask me to make 100 foot bracelets for her in return of $2700 by Sept. 30th. She then changed it to 50 for the same amount in return due by the 17th. I finished them early so she decided we would meet on the 12th. She backed out of the meeting on the 12th and has now had no communication with me as of the 18th. I have spent close to $800 dollars in material to make these foot bracelets. I have a phone record showing where she called me and we have talked for hours at a time. I also have many receipts showing that I purchased material after our first conversation. Along with all of this I have texts on my phone where I sent her pictures of my bracelets and feet that she requested, as well as texts messages between us regarding making these bracelets. She usually called me the majority of the time. I am pretty sure I will not hear from her again unless I take this to small claims court. Do I have a strong oral contract and sufficient evidence?

  7. hello there and thank you for your info ? I have certainly picked up anything new from proper here. I did on the other hand expertise a few technical issues the usage of this site, since I skilled to reload the web site lots of instances prior to I may get it to load correctly. I have been pondering in case your hosting is OK? Not that I’m complaining, but sluggish loading circumstances instances will very frequently have an effect on your placement in google and can damage your quality score if ads and marketing with Adwords. Anyway I am adding this RSS to my e-mail and could look out for much extra of your respective exciting content. Ensure that you update this once more very soon..

  8. Employer and I agreed to pay me a bonus equivalent to 2% of the revenue I brought into the company. Records show that I was conpensated accordingly for many years, then last year I was told that I would not get conpensated even though revenues were the same as previous years. Conpensation was due to the fact that I was an old employee that would not receive a percentage of the company when current owners purchased this business. I worked for this company for 40 years. Do I have a case, I live in Louisiana.

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