Is an Oral Agreement Legally Binding?

By SupportAgent User

We’ve all sealed a deal with a handshake--maybe to purchase a used car, loan a friend money, and anything in between. Chances are, that while making this “informal” agreement you may have thought, “If I want to back out of this later, I am sure I can.”

However, the truth is that oral contracts are binding in most circumstances.

The trick to enforcing an oral contract is proving it in court. Under most circumstances, a written contract merely memorializes the terms that the parties agreed to. Theoretically, the parties to a contract are aware of all the terms, but the contract serves as a reminder, so to speak, of the complete deal. However, it is only a reminder. If a party can prove that a contract existed orally (say through a recording, or through another witness) then that contract will be enforceable.

With that said, there are a few contracts that, depending on the laws in your state, may require a written contract. This is called the “Statute of Frauds” because it prevents one party from fraudulently arguing that a contract exists when it really doesn’t. The situations where a writing is usually required are most commonly:

- Contracts for the sale of land
- Contracts for the sale of goods over $500
- Contracts that cannot be completed in one year.

If you have any further questions about contract law, or to find out if a contract is a valid, legally binding agreement, speak to an experienced attorney today.

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