What You Need to Know About Verbal Contracts

As you might have guessed, a verbal contract is an agreement between two people that is only discussed verbally. Nothing is written down to show that an agreement has taken place; instead, it is on the word of each party alone that the deal is created.

Can you legally enforce a verbal contract in Massachusetts?

Naturally, the problem with a verbal agreement is that if there is a dispute between the parties who made the agreement, it is difficult to prove who agreed to what, and it comes down to one person’s word against another’s. Despite this, verbal contracts are still used occasionally, and individuals or organizations may cite a verbal contract as part of their defense against one another.

It is difficult to legally enforce a verbal contract because it is up to the judge to decide which party is telling the truth or if there is a reason to believe that the terms of the verbal contract have been violated in some way or were unreasonable to begin with. If one party agrees to perform a particular service, for example, but then takes an unreasonably long time to do so, or does a particularly poor job, should they still be paid the agreed amount? This is what a judge will have to decide based upon hearing each person’s version of events and any additional evidence they can provide.

If the judge feels unable to make a clear decision based on what they have heard, the case would likely be thrown out.

When must a contract be written?

There are some situations where a verbal contract is unacceptable. The Statute of Frauds requires written contracts when:

  • A transaction of $500 or more takes place
  • If one person agrees to take on another person’s debt
  • There is an agreement to complete specific tasks, projects, or work that would take over one year to complete
  • Real estate transactions
  • A marriage contract

Verbal agreements in these cases would never be upheld in court or considered legally binding. Instead, anyone wishing to take part in these activities should have their contracts written by an experienced attorney to help best protect their interests.

Is a verbal contract ever wise in business?

If people know each other very well, they may have a certain level of trust that makes them think that a verbal contract is good enough to start doing business together. However, a verbal agreement will cause problems in your business when there is contention about what you actually agreed to. Regardless of how well you know the person, you should always have a written agreement to keep each party clear about their roles, responsibilities, and expectations. Whether you are delivering services, exchanging or sharing goods, or investing time and/or money, you should have a written agreement for your business transaction. This way, if any dispute occurs, each party can refer back to their written agreement.

If you would like legal help writing a contract for your business, schedule your free, confidential consultation with John Espinosa, Esq. Get in touch today at (978) 288-1468.

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John Espinosa, Esq.

John Espinosa helps entrepreneurs do business right by providing convenient access to quality legal advice and services, with more than 15 years experience in the legal field from multiple perspectives.

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