Breach of contract is a confusing corporate law issue for business owners, especially when a verbal assent is involved. Many entrepreneurs are unsure of their rights when it comes to enforcing an oral contract as opposed to one that is written. Although verbal contracts can be just as legally binding as those documented on paper, there are some unique considerations for this kind of agreement. The guide below explains what you should know about this concept. 

What to Know About the Legality of Verbal Contracts 

Definition of a Verbal Agreement 

A verbal agreement is an arrangement made between two or more parties in which the terms have been agreed upon entirely through spoken communication. There is no document drafted or signed, but all aspects of the contract have been discussed, including the offer, acceptance, and exchange of value. 

Proving a Contract Is Valid 

For a verbal contract to be considered legally binding, corporate law requires certain criteria be met. To begin with, the agreement must serve a lawful purpose and not involve any illegal activity. Additionally, the terms of the contract cannot be vague, incomplete, or misrepresented, and all parties must have agreed of their own free will, meaning without being coerced, put under duress, or unduly influenced. Witnesses are often necessary for establishing the validity of an oral agreement. 

When Oral Agreements Are Not Binding 

There are some circumstances when a verbal contract may not be binding under corporate law. Under the Statute of Frauds in New York, written contracts are required to transfer ownership of real estate, when selling goods valued over $500, if an agreement cannot be performed within one year, and when agreeing to pay someone else’s debt.

Proving that a verbal contract has been breached can be challenging. That’s why it’s in your best interest to turn to the legal team at MacVean, Lewis, Sherwin & McDermott, P.C. in Middletown, NY, for assistance resolving this kind of case. They have extensive knowledge and experience in corporate law and the resources to compile the evidence necessary to enforce the terms of the agreement. To schedule a consultation at one of the oldest and most trusted firms in the Hudson Valley, call (845) 343-3000. Visit them online for more information on their commercial litigation services.