Baldwin & Briscoe P.C.
301-862-4400
22335 Exploration Drive Ste. 2030
Lexington Park, MD 20653
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Is your Verbal Agreement worth the “Paper” it’s

printed on?

 

The title of this article is of course written tongue-in-cheek.  Is a verbal agreement enforceable in court?  The answer, as with most legal questions, is that it depends on the specific facts and circumstances, or in other words – it depends.

As a general rule, verbal agreements are generally enforceable under the law.  I stress the word generally here because there are numerous specific circumstances in which a verbal agreement is not enforceable.

Before getting into the exceptions to the general rule, it is important to first ensure that you in fact have an agreement.  Like any contract, a verbal agreement must fulfill the elements of a contract, generally.  The elements of a contract are an offer, an acceptance, and consideration.

In order to form a contract, the offer and acceptable must match exactly, or be a “mirror-image” of one another.  If, for example, Bob sends a proposal to Charlie to replace a door for $200, and Charlie sends an email back to Bob that says “I accept your proposal, please complete the job by tomorrow”, it is unlikely that the parties have a contract.  The reason that no contract was formed was that Charlie included a new term in his “acceptance” that was not contained in Bob’s offer; that is he imposed a deadline that was not part of the previous communication.

 

  An “offer” is a defined as a reasonably definite proposal made by one part to another under circumstances indicating an intent to enter into a contract.  The offer must be reasonably definite.  This means that it cannot leave material terms unresolved.  “I’ll sell you a car” is not an offer because it lacks the definiteness required.  I’ll sell you this 1957 Chevrolet convertible sitting in my driveway for $15,000 if you can complete the purchase within a week” on the other hand is more likely to be an offer.  It is definite as to the price, timeframe and substance of what is being exchanged in the contract.

An “acceptance” is an agreement by the party to whom an offer has been made whereby that person unconditionally accepts the terms of that offer.  For an acceptance to be valid, it must be unconditional.  So in the example above, if the listener says “I accept” after hearing the statement about selling the Chevrolet for $15,000, the parties likely have formed a contract.  In order to form a contract, no material or important term can be left for future discussion or resolution.  The acceptance must be a mirror-image of the offer.  If it is different in any material way, it will not be an acceptance, but will be what we call a counter-offer.  A counter offer acts as a rejection of the initial offer and sends a new offer back to the original offerror for consideration.

All contracts, including verbal one, must also be supported by consideration.  Consideration can be anything of value to the other contracting party.  In order to have a contract, each party to the contract must tender or promise some consideration.  If I promise to give you five dollars on Wednesday, there is no contract, because there is no consideration for my promise.  If on the other hand, I promise to give you five dollars on Wednesday and you promise to make me a sandwich in exchange, then we have a bargained for exchange, that is consideration.  Your promise to make me a sandwich is consideration for my promise to pay you five dollars.

  Certain types of contracts must be in writing by law.  This is required by what attorneys sometimes refer to as the “Statute of Frauds”.  A contract for the sale of goods at a price of $500 or more is subject to the statute of frauds and not enforceable if not in writing.  A surety contract, that is where one person is answering for the debt of another, such as a personal guaranty, is subject to the statute of frauds.  An agreement made on consideration of marriage is subject to the statute as is a contract which cannot be performed within a year.

There are some situations where a court will enforce a contract despite it not meeting the requirements of the statute of frauds.  Generally these fall into two categories- estoppel and partial performance.  To establish an estoppel, sometimes called promissory estoppel, a plaintiff must show four things: (1) a clear and definite promise by the defendant; (2) where the defendant has a reasonable expectation that the promise will induce action or forbearance on the part of the plaintiff; (3) which does induce actual and reasonable action or forbearance on the part of the plaintiff; and (4) which causes a detriment which can only be avoided by enforcement of the promise.

 

  The doctrine of part performance is premised on the notion that allowing a party to escape his obligation after he has permitted the plaintiff to perform in reliance on both the agreement and the defendant’s inducements would effect a fraud upon the plaintiff.  Part performance is not really a substitute for the writing required by the statute of frauds as much as it is a means to estop the defendant from asserting the statute of frauds as a defense.

 

  As you can imagine, the analysis involved in determining the enforceability of a verbal contract can be quite complicated.  There are many nuances that can affect each party’s rights concerning a verbal contract. 

The information contained on this page is provided as general information and does not constitute legal advice.  The experienced attorneys at Baldwin, Briscoe & Steinmetz, P.C. can assist you if you have questions concerning a contract, including verbal contracts.  We’d be happy to sit down with you and review your situation and provide appropriate advice. 

Contact Us

The Law Offices of Baldwin & Briscoe, P.C.

22335 Exploration Drive

Suite 2030

Lexington Park, MD 20653

301-862-4400 Phone

301-862-3009 Fax

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Samuel C.P. Baldwin, Jr., Esq.

Janice Briscoe, Esq.

Richard J. Steinmetz Jr., Esq.

David J. Hebb, Esq.

Sandra Kaufman Jonasen, Esq.

Andrew N. Sindler, Esq.
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With an office conveniently located in Lexington Park, The Law Offices of Baldwin & Briscoe, P.C. serves clients in the counties and cities of Lexington Park, Leonardtown, Hollywood, Mechanicsville, Loveville, Helen, Breton Bay, Chaptico, Charlotte Hall, Golden Beach, Avenue, La Plata, Waldorf, Newburg, Port Tobacco, Port Charles, Solomons Island, Prince Frederick, Chesapeake Shores, Hughesville, Benedict, Nanjemoy, Lusby, Port Republic, St. Mary's County, Charles County, Calvert County, Prince George's County, Southern Maryland.


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