Court Upholds Validity Of Oral Contract After Lengthy Process

A verbal agreement may seem to be a more cost-effective and simpler alternative to drafting a written contract. It may also appear to be a way to test the received goods before signing a written agreement. However, a written contract can be more readily enforced than an oral contract, and the breach of an oral contract may take much longer to settle.

The law requires that certain kinds of contracts, like contracts for the sale of goods over $500.00, be in writing. When such contracts are not in writing, they may only be enforced in limited circumstances, such as when the party resisting enforcement of the contract admits that a contract was made or there is other evidence sufficient to show that the parties intended to make a contract. These legal rules determined the outcome of a recent Illinois Appellate Court case. In that case, the defendant allegedly made a verbal agreement with the plaintiff to purchase equipment and the rights to work at certain events for a concession business. The defendant made a down payment while they waited for the approval of a bank loan for the rest of the $150,000 purchase price. Following a season of poor business, the court reported they returned the equipment without having paid the full purchase price. The plaintiff claimed that the defendant had breached the oral contract. Their claim was denied by the trial court, which found that there wasn't enough evidence to establish that a contract had been made. However, the appellate court overturned the trial court's ruling, concluding that an offer to sell the concession business had been made by one party and accepted by the other.

During the trial, one of the defendants purportedly admitted that a contract was made between the parties, and the court concluded that they had clearly breached the agreement. If there is no clear written contract, many times the court will have to look at the statements made by the parties and their conduct to determine whether a contract exists and what the terms may be. This process places both parties at risk of potential loss of the case depending on the facts which can be actually proven in court and the court's determination of the admissibility, credibility and importance of the evidence presented. As shown by this case, a disputed situation which might be capable of a simpler resolution may evolve into protracted and expensive litigation if the rights of the parties are not clear.

A written contract helps remove doubts concerning the content of an agreement and the intent of the parties to enter into a contractual agreement. You should understand that a verbal agreement involving an offer and acceptance can be legally binding but can ultimately be more complicated than a written agreement. It is always advisable to consult with your attorney and draft a formal, written contract to be signed by all parties involved.

This article is intended to present general information for educational purposes, is not legal advice and should not be relied upon in connection with any particular matter. The reader is advised to immediately retain their own separate legal counsel with respect to any specific legal issue. Rights to bring a claim will expire through the passage of time by the applicable statute of limitations.

Ralph E. Elliott practices law at Law Offices of Ralph E. Elliott, A Professional Corporation which is comprised of Attorneys in Freeport, Illinois who have over 34 years of experience including an Estate Planning, Elder Law, Business and Personal Injury Law practice. The firm is situated at 1005 W. Loras Drive, Freeport, IL 61032 which serves business, individuals and the agriculture community in Northwest Illinois.

©Law Offices of Ralph E. Elliott, A Professional Corporation 2012.

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Contract Disputes: Worthy of Avoiding

In today's market economy, your business needs to be protected. One of the most effective ways in which to do so is through a contract. When written properly, the contract will not only protect you and your business from potential liability but it will also assure that the other party or parties concerned are pleased as well.

Before the document is signed, it's possible for a mediation to occur ensuring that everyone is happy. Indeed, a contract is a must-have for anyone with a business and the best way to get the most effective contract is to hire a professional attorney.

Contracts minimize and eliminate risk for all parties concerned. In the event of a contract dispute, a lawyer-penned document has a much better chance of being upheld in a court of law should the dispute come to that. Otherwise the matter is left up to a judge who has to make a decision based on action rather than documentation; an outcome that could possibly strip away your rights as a business owner. Contracts are about protection and the strongest legal protection is provided by a legal expert. Oral contracts are oftentimes dismissed in a court of law, but documents are much more stable. To ensure that you get the strongest contract, a lawyer is needed to certify that the document is durable and that all parties are accounted for.

Especially if your business continues to grow, more protections may be needed to ensure its vitality. Overlooking details can not only leave your company vulnerable but can be costly as well. Not including any loss you may incur from the forfeiture of proprietary information, the court process itself can also be extremely costly. Imagine that a dispute has arisen and if it winds up in court, you, as the company president, could be liable for all court costs or mediation fees.

The preventative nature of contracts makes it possible to expand and carry out your business as worry-free as possible. If someone gets hurt on the job, or a vendor reneges on an oral agreement, you're protected from the potential of high cost litigation or poor quality of service. Anything that limits your ability to deliver a solid service affects your bottom line. The best way to protect that bottom line is to secure a legal document, composed by a legal expert, which will be upheld in a court of law.

This article was written by Roger Brent Hatcher, an attorney at Smith, Gilliam, Williams & Miles, a leading Atlanta Law Firm since 1928.

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A View on Contract Law

Contract law governs disputes between parties who have formed some sort of contract, which could mean oral or written, and are now involved in a suit because one side believes that the other side has breached, or not performed as required by the contract.

Contract disputes can arise in a number of different contexts. One major area of contract disputes is between providers of building and repair services, such as plumbers, builders, and electricians, and their customers. Sometimes the customer will sue because the service provider has not completed work as promised, other times the contractor will sue because they have not been paid. Another common area of contract disputes is between buyers and sellers, when a person agrees to buy or sell something at a certain price and then backs out or tries to change the price. Contract disputes can also arise between employers and employees, landlords and tenants, and in many other situations.

One of the basic tenets of contract law is that people are free to contract in any way they wish. The court will generally read the contract they way it is written and not judge whether or not it seems fair or reasonable. The court will not, however, enforce contracts that are illegal (such as a contract for the sale of drugs or sex) or contrary to public policy. Also, in some cases the court may be reluctant to enforce a contract where they feel one party was coerced or tricked into entering into the contract or if the contract seems so unfair as to be unconscionable.

Another problem in contract law is finding damages. It is rare that a court will order specific performance, or forcing a person to act. Generally, the court will try to ascertain a monetary loss and order the breaching party to pay damages suffered by the non-breaching party. Specific performance would be impossible in many cases because a person may no longer have the goods they promised to sell, and forcing a person to act is too much of a restriction on liberty. Besides which, if a builder did a bad job the first time, you may not want them to be the ones to fix the problem, especially if they are now resentful for losing a suit and being ordered by the court. Specific performance may sometimes be awarded in situations involving a unique piece of land, a one of a kind item (such as a rare piece of art), or the performance of a famous musician, actor or athlete.

Claire Jefferies is writing on behalf of 11 Stone Buildings, who remain the top Barristers in London. They also offer London property Barristers and property solicitors in London

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When Is an Oral Contract Unenforceable?

You may have heard the general rule that oral contracts are binding, but there are exceptions. It can be tricky to know when an oral contract is sufficient and when a written contract is required. This article outlines the exceptions to the general rule that oral contracts are binding, and provides some food for thought on situations in which oral contracts are binding. A caveat, however, is that each court makes case-by-case decisions, and the rules for oral contracts may not always play out exactly as planned. It is ALWAYS best to get a written agreement if possible. Often, however, this question arises after a dispute concerning an oral contract.

The central legal concept when discussing the validity of oral contracts is the "Statute of Frauds". This is an old legal term that basically dictates what types of contracts must be in writing in order to be valid. The rule is intended to avoid situations where fraud could easily result if oral contracts were allowed. Contracts that are unenforceable unless in writing, and are said to "fall within the Statute of Frauds", can be divided into the five categories below. Be aware that each category has much more specific rules and state case law and this list is intended only as a general outline.
Uniform Commercial Code (UCC) contracts- A contract for the sale of goods for a price of $500 or more.A contract that could not possibly be completed in less than one year.A contract for the sale of an interest in land.A contract to pay the debt or answer for the duty of another (Suretyship/ Executor).A contract made upon consideration of marriage.

These categories point out that the situations in which a written contract is required can come up quite often in a wide variety of business transactions. The first three categories alone cover a large number of common transactions. Any time there is a sale of goods over $500 that falls within the UCC, any contract that could not be performed in less than one year, and any contract for the sale of land must be in writing in order to be binding. The other two also come up, but not as often.

The Real World of Oral Contracts

Some people make a major error when thinking about whether or not to rely on an oral contract. What does "enforceable" actually mean in a real-life situation? Even oral contracts that are legally enforceable are difficult to enforce if a dispute ever arises. Perhaps a hypothetical situation will illustrate the point. If Albert agrees to paint Bella's house for $1,000, fails to do so, and admits in open court that the contract was agreed upon just as Bella says, then Bella would win the lawsuit because the oral contract is enforceable. In reality, this situation rarely plays out. Oral agreements are inherently vague. People often assume that the other party knows what they want or expect. When a dispute arises, people often remember and repeat the oral conversation differently in which the terms were discussed. Sometimes this is because they simply forget, and sometimes they lie to save their skin. The ultimate dispute is reduced to nothing more than a he-said, she-said swearing match. The point is this: whether or not a situation could be covered by an oral agreement, it does not mean that it should be. Contracts should be in writing in order to ensure that both parties know they have the same understanding and expectations, and to make any possible dispute resolvable in a much faster and simpler fashion. In fact, having the agreement in writing can often avoid the need for costly litigation and encourage parties to find common ground. At the beginning of a business agreement, almost everyone thinks that it will go smoothly and no dispute will occur, and they are usually right. But out of those countless blissful business beginnings, disputes do happen. If you have failed to get the agreement in writing simply because an oral contract is "enforceable", you are much less likely to win the dispute.

Some might argue, "I will lose business if I seem like I am trying to push someone into signing a contract." The truth is that the vast majority of legitimate businesses will sign an agreement, especially if they understand that its purpose is to clarify the roles of each party and to protect both parties. Generally, a party who refuses to sign any type of written agreement in a transaction is a walking red flag and is probably not worth the risk. Losing that kind of business can save yours.

When considering a business transaction or agreement, it is essential to use experienced and knowledgeable attorneys to draft these documents so that the agreements will hold up in court if challenged. Further, if a dispute arises concerning an oral or a written contract, you will need attorneys that are very familiar with commercial and civil litigation. The attorneys at Gunderson, Denton & Peterson can provide the solid legal advice and services that will allow you to sleep well knowing you are protected and well-represented.

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