A broken verbal agreement can cost your business time, money and clients. The dreadful part is the suspicion about the enforceability of that oral contract in the first place. In California, oral contracts are enforceable in many situations, though important exceptions and conditions determine whether they hold up. Here is what you need to know.
When is an oral contract legally enforceable in California?
California law considers most oral contracts to be legally binding, except those that the state statute specifically requires to be in writing. However, an oral contract generally needs to meet the same core elements as any written agreement to be enforceable. Those elements typically include a clear offer, acceptance, consideration (something of value exchanged), the capacity of each party to enter the agreement and a lawful purpose.
Not every oral agreement qualifies, though. In California, certain contracts are unenforceable unless they appear in writing and the party to be charged signs them. These include agreements for the sale of real property, contracts that parties cannot perform within a year and commitments to loan more than $100,000 for non-personal purposes, among others.
What should you do if you suspect breach of contract?
If someone has broken an oral agreement with you, gathering evidence promptly can be a meaningful first step. Proof of a verbal agreement may include receipts, letters, emails, other written communication, pictures and witness statements. You should also be mindful of deadlines. California has a two-year window to file a lawsuit for breach of an oral contract from the date the agreement was broken. Letting that window close may limit your ability to bring a claim in court.
How a legal guide may help
Oral contract disputes often raise complex questions about what the parties agreed to, who bears responsibility and whether you can pursue a lawsuit. An attorney familiar with California contract law may help you assess the strength of your position and clarify what steps, if any, might be available to you.