When Is a Verbal Agreement Legally Binding in California?
- Verbal contracts are legally binding in California, but proving their existence and specific terms can be difficult.
- There are some types of agreements that require a written contract to be enforceable under California law, including most transactions involving real estate.
- California law outlines multiple types of acceptable evidence for establishing the existence of a verbal contract.
- If you need help proving, formalizing, or enforcing a verbal agreement in California, the experienced business litigation lawyers with Cutter Law can help.
A verbal contract, or oral agreement, is a contract negotiated and agreed to through spoken words instead of a written document. While California law considers verbal agreements legally binding in certain circumstances, proving the existence and terms of a “handshake deal” can be challenging without direct evidence of a contract.
Are Verbal Agreements Legally Binding in California?
In California, verbal agreements are generally permitted unless the law explicitly requires a written contract. Verbal agreements are legally binding in many circumstances if they meet the basic requirements of a valid contract under California law, which include:
- Parties capable of contracting: The people entering into the contract must be considered legally competent to do so. Contracts involving minors or those considered mentally disabled are generally invalid.
- Their consent: The parties must have mutually agreed to specifically communicated terms, free of coercion.
- A lawful object: An agreement to commit or support illegal activity cannot be legally binding.
- A sufficient cause or consideration: A legally binding contract requires a promise to exchange something of value between the parties, specifically to provide a benefit or suffer a “prejudice.”
When Verbal Agreements Are Not Enforceable
California’s Statute of Frauds, Civil Code § 1624, outlines situations where only written contracts are considered enforceable. Examples of contracts that must be in writing to be legally binding include:
- Agreements for the sale of real property, or for a lease of real property for more than one year.
- Agreements employing a real estate broker/agent or otherwise authorizing someone to buy or sell real estate (or to lease real estate for more than one year) for compensation, including agreements to pay a commission.
- Surety agreements, meaning certain promises to answer for another person’s debt or default, though several exceptions exist.
- Agreements that, by their terms, cannot be performed within one year from the date they are made.
- Agreements that, by their terms, are not to be performed during the promisor’s lifetime.
- Certain agreements to lend money or extend credit in an amount greater than $100,000 made primarily for business or commercial purposes (with statutory exceptions, including certain loans involving a family or household purpose).
Some other types of contracts are required to be in writing under separate California laws. The Uniform Commercial Code requires a written agreement for the sale of goods worth more than $500, and the Family Code states that marriage contracts, such as prenuptial agreements, must also be in writing. If any of the above types of deals were reached through an oral agreement, the contract cannot be enforced in court in California.
Proving a Verbal Agreement in California
While it’s tough to prove a verbal contract in court, it’s not impossible. California law outlines that electronic or written documents confirming a contract can serve as valid proof of its existence, even if the evidence misstates explicit terms of the contract itself.
Acceptable Forms of Evidence
Under California law, proving an oral agreement often depends on the available evidence. But if the deal falls within the Statute of Frauds, an oral agreement is generally enforceable only if there is a qualifying writing (or a recognized exception applies). Evidence that may help establish the agreement includes:
- Written or electronic messages (such as emails, texts, letters, invoices, or other records) that memorialize the agreement’s existence and key terms. If the Statute of Frauds applies, the writing generally must be signed (or otherwise authenticated) by the party against whom enforcement is sought.
- A note, memorandum, or other written document that indicates an agreement was made and includes the essential terms, signed by the party to be charged.
- An admission by the other party (for example, in testimony, deposition, or written communications) acknowledging that the agreement existed—though an admission does not necessarily eliminate a Statute of Frauds writing requirement in every situation.
Any evidence must also be admissible in court. For example, California is generally a two-party consent state for recording confidential communications, so an audio recording may be inadmissible (and create legal risk) if it was made without the required consent.
Burden of Proof
The person attempting to enforce a verbal contract is responsible for establishing the existence of the agreement. It can be challenging to prove the specific terms of a contract that isn’t written. Thankfully, the claimant must only prove their case “by a preponderance of the evidence,” meaning that it’s more likely than not that the contract existed.
How to Protect Yourself in Oral Agreement Situations
If you’re considering entering into a verbal contract, formalizing the deal afterward through a written note can help create explicit evidence of the terms you’ve agreed to. If you’ve already agreed to an oral contract and are worried about whether the other party will honor it, it’s best to take action as soon as possible to gather and preserve as much evidence for the existence of the contract as possible.
If the other party to your agreement breaches a verbal contract, you’ll have two years from the date of the breach to file a lawsuit against them — half as much time as the law allows for a written contract. An experienced California business litigation lawyer can help you attempt to formalize the terms of a verbal agreement or pursue enforcement of a broken oral contract.
Protect Your Rights: Get Legal Guidance on Verbal Agreements in California from Cutter Law
With roots in Sacramento dating back to the Gold Rush, Cutter Law has a strong tradition of helping personal injury victims in California get justice. Our team is deeply experienced in business litigation, contract law, and fraud disputes in California. Our knowledge of local laws and procedures helps us build strong cases quickly and efficiently move them through the legal process.
When you work with us, our entire firm collaborates as a team to get you the results you need. If you need help resolving a dispute over a verbal contract, we can help you formalize your agreement or bring a lawsuit for breach of contract. You won’t pay us anything unless you win. Contact us online or call (888) 285-3333 today for a free consultation.
Key Takeaways Examples of deceptive business practices in California include false advertising, hidden fees, and bait-and-switch tactics. California has strict
The California False Claims Act (CFCA) makes it a crime to make false statements when charging the state for goods or services.
Whistleblowers are protected by federal and California laws, which prohibit retaliation, including termination.