Are oral contracts enforceable? The short answer is “It depends.”
In the state of California, certain contracts have to be put in writing before any court will even consider enforcing them. The majority of oral agreements, however, are legally enforceable. The dilemma comes not from whether they are able to be enforced as a matter of law due to the fact that nothing is written down, but whether the moving party (the party that filed a motion with the court) is able to unequivocally demonstrate that the verbal agreement ever existed at all because it was not put into writing.
This is the primary headache with an oral contract: the aggrieved person is usually powerless to fulfill their burden of proof concerning the terms of the contract so, in the end, the agreement is unenforceable and they are turned away empty-handed.
When working with an oral contract, frequently the only tangible evidence of its existence and agreed-upon terms is the verbal testimony of those involved, which tend to shift because of variations in interpretation and memory from people on both sides.
Types of Contracts
Listed below are a few kinds of contracts which have to be put into writing before they will be enforced by a California court pursuant to California Civil Code §1624(a):
(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 the 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 bypass the chance that your verbal business agreement will not be upheld because of a lack of proof or non-compliance with California laws, it is smart to make sure all necessary contracts are put into writing and upheld by both parties.
If you are drawing up a business contract, are interested in having a contract drawn up to memorialize your deal with another person, or need an experienced business contract attorney to examine a previously drafted document, please reach out to the trusted and qualified business law and contract law attorneys at Leiva Law Firm by calling our law offices at (818) 703-1777. Our attorneys speak both English and Spanish.