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Oral Contract & Breach of Oral Contract

Oral contracts are contracts that have been agreed upon orally between two or more people. While the majority of oral contracts are verbal agreements, many also have partially written agreements or physical evidence to sustain the original contract. An oral contract is as valid as a written contract, however, in a dispute, it is harder to prove the agreed upon conditions of the contract. Below are just a few of the more commonly asked questions regarding oral contracts.

What is the maximum amount allowed for a binding oral contract in VA? A friend made an oral agreement to buy a boat for $6000. Two days later he changed his mine. The seller is threatening to sue him for breach of contract. Isn't the maximum amount for an oral contract $500?

The maximum amount for an oral contract is $500. Any agreement over this amount would need to have a written contract in order to be enforceable. The Virginia Statute of Fraud states this type of action. There are exceptions in the Statute code; however, your situation doesn't seem to fall under any of these. You can use the Statute of Fraud as a defense if the seller tries to sue your friend for breach of contract.

I had an oral agreement with a company. I was to design and install a CCTV system, purchase and deliver equipment. The company backed out of the deal and only refunded me for the equipment but not the rest of the agreed upon work. Can we recover the agreed upon amount?

Generally, without a written contract it would be hard to recoup for time and effort. However, if the company had agreed to pay for all work, you could sue them for breach of an oral contract or you could sue the company for unjust enrichment. Either way, you should contact an attorney to assist you in preparing your arguments. Your attorney's fee can also be recovered if you win your suit. The chances of you recovering your agreed upon amount seem to be good. Your chances would be greater if you had a written contract that stated that all expenses would be paid for by the company.

If a person owes me money from an oral contract, can I have them sign an agreement to pay me back before the statue of limitations are up?

You can have to other party sign a promissory note to repay you for the money owed. If and when you get the other party to sign the note, the statue of limitations will restart. You have two choices; you can get the person to sign the promissory note or file for breach of an oral contract. You should first attempt to get the person to sign a promissory note or contract stating that they will repay the debt. By doing this, it will allow you more time to attempt to collect and also file a claim for breach of contract for. Suing for breach of contract is easier to prove than an oral contract.

How hard is it to prove for certain that an oral contract existed? Can I use voicemails and emails to prove that I had an oral agreement with a person?

Generally, when it comes to proving the stipulations in an oral contract, it sometimes becomes a fact of your word against the other person's word. In situations like this, it usually is left up to a judge or jury to determine which side is more credible. Sometimes, one party may show proof by providing evidence of the opposing party's actions that would make no sense without an oral agreement. For example, if Tom agreed to build a barn for Mark, and they agreed on a price but Mark refused to pay Tom, the fact that Tom built the barn would show reasonable cause to expect payment from Mark. In your situation, you have emails and texts that validate your claim. You can use the emails and texts to prove that there was an oral contract between you and the other party.

If a person defaults on an oral agreement to purchase a house after making a down payment, do you have to refund the down payment? We live in Missouri.

In Missouri, you must have a written contract when selling real estate. This is a law which is called "Statute of Frauds". When you are selling real estate based off an oral contract, the contract would be invalid. While an oral contract can be used for many things, the sale of real estate isn't one of them. Due to the oral contract being invalid, it is possible for the court to award the opposing party to be reimbursed the deposit if he/she were to sue you in small claims court.

Oral contracts are a common practice between people. Many oral contracts end in success while others end up in court. Before you enter into an oral contract, you should consult and Expert who can explain the legal issues regarding oral contracts. Once an Expert explains the legalities of oral contracts, you will be better prepared to enter into the agreement.
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