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Contracts are the backbone of many agreements and transactions. While written contracts are standard, verbal agreements also play a significant role in business dealings. But can you legally enforce a verbal contract? The answer is nuanced and depends on several factors. Here’s what business owners in Massachusetts need to know about enforcing verbal contracts.
Understanding Verbal Contracts
A verbal contract, also known as an oral agreement, is a contract made through spoken communication rather than in writing. These agreements can be just as binding as written contracts, provided they meet certain criteria. For a verbal contract to be enforceable, it must include the following elements:
- Offer and Acceptance – One party must make an offer, and the other must accept it.
- Consideration – Something of value must be exchanged between the parties.
- Mutual Intent – Both parties must intend to enter into a binding agreement.
- Legal Purpose – The contract’s purpose must be lawful.
When Are Verbal Contracts Enforceable?
In Massachusetts, verbal contracts are generally enforceable if they meet the above criteria. However, there are exceptions and specific situations in which a verbal contract may not be legally binding.
Statute of Frauds
The Statute of Frauds is a legal doctrine that requires certain types of contracts to be in writing to be enforceable. In Massachusetts, the following agreements must be in writing:
- Payments from a deceased person’s estate
- Payment of someone else’s debt
- Consideration of marriage (i.e., a prenuptial or postnuptial agreement)
- Real estate transactions
- Performance that will not occur within one year
- The sale of more than $500 in goods
If your verbal agreement falls into one of these categories, it will not be enforceable unless it is in writing.
Evidence and Proof
Without written documentation, it can be challenging to demonstrate that a contract was made and the specific terms. Courts typically look for the following to support the existence of a verbal contract:
- Witness Testimony – Third parties who were present when the agreement was made can testify
- Conduct of the Parties – Actions taken by the parties that are consistent with the terms of the agreement
- Written Communications – Emails, text messages, or other written communications that reference the agreement
Consistency and Clarity
For a verbal contract to be enforceable, the terms must be clear and agreed upon by both parties. Ambiguity or lack of clarity can make it difficult for a court to determine the contract’s terms and enforce them.
Steps to Protect Your Business
While verbal contracts can be enforceable, written contracts are generally preferred because they provide clear documentation of the terms and conditions agreed upon. Here are steps you can take to protect your business:
- Put It in Writing – Whenever possible, document agreements in writing. Written contracts provide clear evidence of the terms and reduce the risk of misunderstandings or disputes. Even if you start with a verbal agreement, follow up with a written document that both parties sign.
- Keep Detailed Records – Maintain detailed records of all business transactions and communications. This includes emails, text messages, and notes from meetings where agreements are discussed. These records can serve as evidence if a dispute arises.
- Seek Legal Advice – Consult with an attorney to ensure that your agreements are legally binding and enforceable. An experienced lawyer can help draft contracts that protect your interests and comply with Massachusetts law.
Contact an Experienced Watertown Contracts Lawyer Today
Verbal contracts can be legally enforceable in Massachusetts if they meet certain criteria and do not fall under the Statute of Frauds. LaFountain & Wollman P.C. is here to support you through contractual matters and other areas of business law. Call us today or contact us online for a consultation.