Challenges of Enforcing Verbal Contracts

Verbal agreements often happen in everyday life. From simple service arrangements to more complex business deals, many rely on a handshake or a spoken promise. But when it comes to the legal enforcement of these agreements, things can get tricky. While verbal contracts can be legally binding in many cases, proving and enforcing them comes with significant challenges.

What Is a Verbal Contract?

A verbal contract is an agreement made through spoken words between two or more parties. In theory, it carries the same legal weight as a written contract, provided it meets the key elements of a valid contract: offer, acceptance, consideration (exchange of value), capacity, and legality. However, without written documentation, proving the existence and terms of the contract becomes much more difficult.

To know more about contracts, read this article: Understanding the Basics of Contract Law in Texas

Common Challenges in Enforcing Verbal Contracts

1. Lack of Evidence
2. The primary challenge in enforcing a verbal contract is the absence of physical evidence. With no written terms to reference, proving the specifics of the agreement is often reduced to “he said, she said.” This can create a scenario where one party may deny parts or all of the agreement, making it hard to establish a clear basis for enforcement.
3. Disputes Over Contract Terms
4. Even when both parties acknowledge that an agreement exists, they may disagree on the terms. Without a written document to clarify what was agreed upon, the details can become muddled over time. One party may remember certain provisions differently, leading to confusion and disputes about what each party is obligated to do.
5. Burden of Proof
6. In a legal dispute, the party seeking to enforce a verbal contract carries the burden of proof. This means they must present compelling evidence that the agreement existed and what its terms were. Without a written contract, this often relies on witness testimonies, phone records, emails referencing the agreement, or other circumstantial evidence. While these can help, they are not as strong as having a signed document.
7. Reliance on Witness Testimony
8. If a verbal agreement was made in the presence of others, witness testimony might be used to support the enforcement of the contract. However, witnesses may have limited recollection, or their memory of the agreement could be biased. Testimonies are inherently subjective and can be challenged in court, weakening the case.
9. Statute of Frauds
10. In some situations, Texas law (like the laws in many states) requires that certain contracts be in writing under the Statute of Frauds. This includes agreements related to real estate transactions, contracts that cannot be completed within a year, or sales of goods worth more than $500. If a verbal contract falls under one of these categories, it won’t be enforceable unless it’s documented in writing.
11. Time Sensitivity and Memory Decay
12. Time is another factor that can challenge the enforcement of a verbal contract. The longer it takes to address a breach or disagreement, the harder it becomes to recall the details accurately. Memories fade, and people’s recollections may shift, making it increasingly difficult to establish a clear account of the agreement.

How to Mitigate These Challenges

To avoid the pitfalls of enforcing verbal contracts, it’s always advisable to formalize agreements in writing whenever possible. Here are some tips to help mitigate the risks:

• Put It in Writing: Even if you don’t draft a formal contract, document the key terms of the agreement in writing and have both parties sign it. This simple step can prevent many of the disputes that arise from verbal agreements.
• Use Emails or Texts: If a written contract isn’t feasible, follow up a verbal agreement with a confirmation email or text message outlining the terms. This creates a record that can be referred to later.
• Include Witnesses: If possible, have a third party witness the verbal agreement. This can provide additional support if the contract’s terms are ever disputed.
• Consult a Lawyer: For more significant agreements, consult an attorney to ensure the contract complies with applicable laws and is enforceable if needed.

Conclusion: Is Enforcing a Verbal Contract Worth the Risk?

While verbal contracts can be binding, the risks associated with enforcing them often outweigh the benefits. The lack of solid evidence, the burden of proof, and the potential for disputes over terms make verbal agreements difficult to enforce in court. Written contracts, on the other hand, provide clarity, reduce misunderstandings, and offer strong legal protection. When it comes to important agreements, taking the time to document everything in writing can save you from headaches, disputes, and legal battles down the road.

Always seek legal advice when entering into significant agreements, and avoid relying solely on verbal contracts whenever possible.