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Can an oral contract be enforced?

There's an old saying that goes something like, "An oral contract is worth the paper that it's written on," but is that the truth? Are handshake deals nothing more than promises in the air with no real substance behind them?

Yes -- and no, not exactly. It's a little more complicated than that.

Some oral contracts can be legally enforced. There are exceptions, however. Generally speaking, oral contracts can't be enforced when:

  • They concern the sale of real property.
  • They involve leases that are designed to last for more than a year.
  • The terms of the agreement require more than a year to complete.
  • The contract is designed to outlast the life of any given party.
  • They involve the transfer of some kind of property after the owner of that property dies.
  • They involve an agreement to pay someone else's debts.

There are also some limitations regarding the amount of money involved in a contract. Oral contracts above a certain amount are also generally not enforceable.

So, what happens if you had a handshake deal with someone that you thought you could trust, and it doesn't fall into any of the "unenforceable" categories? Well, the problem is that you still have to prove you have an agreement in order to get the court to enforce it. That may take work. Were there any witnesses to the oral contract you made with the other party? Were any of the terms of the contract already fulfilled or partially fulfilled by one of the parties? What other evidence do you have of your agreement?

Essentially, it's always wiser to get your contracts in writing if you expect them to be legally enforceable. Otherwise, the burden will be on you to prove that you have a binding agreement. If you're already in a contract dispute, talk to an attorney about your situation.

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