Michelle Cohen Levy

Honest.
Approachable.
Responsive.

Does a verbal agreement constitute a contract?

| May 21, 2020 | Business Law |

Often in business, success is tied to your ability to secure favorable business agreements. These arrangements are usually contractual in nature, thereby providing your business with the clarity and stability needed for it to function.

Yet, there are instances when problems with contracts arise. Sometimes it’s a question of whether a written agreement was breached, but in other situations it’s a question of whether a contract existed in the first place.

Factors to consider

This issue often comes up when verbal promises are made. Generally, a verbal statement isn’t legally enforceable, but it might become binding depending on the circumstances. So, what factors may render a verbal statement an enforceable contract?

There are a couple of things to look at. First, you must consider whether an offer was made. If someone says they can provide goods at a certain price within a certain time frame, then an offer might have been made. But an offer can be found with terms that are much less concrete, such as by offering a price and quantity.

Was there financial harm?

Next, you need to analyze whether the other party relied on the verbal offer to its detriment. If there is detrimental reliance, meaning financial harm, then a court may find the promise to be an enforceable contract.

It’s important to note, though, that the detrimental reliance must have been reasonable and foreseeable to the individual who made the promise, in order for it to have legal relevance.

Do you have questions?

Of course, proving a verbal arrangement can be difficult given that it isn’t recorded anywhere. However, with strong legal representation, you might be able to bolster your position either for or against a finding that a verbal agreement constitutes a contract. To learn more, consider reaching out to an experienced attorney for help.