Verbal contracts are still used at times. However, if there is a dispute, a verbal contract would be difficult to enforce in court.
Nearly everyone who has done business in Massachusetts has signed some form of contract. Whether starting a job, buying a home, financing a new car or taking out a loan, written contracts are a normal part of most types of commerce. However, some people still make use of verbal contracts. Can verbal contracts stand up in court if there is a disagreement?
What does a verbal contract entail?
As the name implies, verbal contracts are not written, but depend solely on the word of each party. There is usually some form of trust with a verbal contract. Whereas a written agreement can be shown to a judge in a dispute, there is no such protection with a verbal contract. In the case of a legal agreement dispute, it often boils down to one person's word against the other's.
Is a verbal contract ever a good idea?
It would usually make sense for the people agreeing on a verbal contract to know each other well. Even then, this may be considered a risk. For example, a person might approach her friend, who owns a bakery, and ask if she would bake some cupcakes for her son's birthday party as a personal favor. If the friend agrees, they may set a price without feeling the need to get it in writing. If the cupcakes are made with no problems and paid for as agreed upon, the friends' agreement would have been satisfied.
Could a dispute be resolved in court?
If, however, the baker felt that the cupcakes took extra time to finish, she might decide she deserves more in compensation for her work. Her friend could very well disagree, and the baker might decide to take her complaint to small claims court. However, without a written contract that specified the original price both women agreed upon, it would be the baker's word against her friend's. If the judge was unable to make a decision based on each person's story, the case would likely be thrown out.
How does the Statute of Frauds apply to verbal contracts?
According to the National Paralegal College, the United States Statute of Frauds requires written contracts in the following situations:
- A transaction of more than $500
- Agreeing to take over someone else's debt
- Jobs or work that would take more than one year to complete
- Real estate or property transactions
- A marriage contract
In any of the above cases, verbal agreements cannot be upheld in court or considered legal and binding. Contract law is often complex and can be contentious if there is a disagreement. Therefore, it is recommended that written contracts be used, no matter how informal the agreement is. It may be necessary to speak with a Worcester business lawyer if there is a contract dispute.