While businesses and consumers do often enter contractual agreements by written contract, it is not uncommon to enter certain contracts using a verbal agreement or oral contract. This is particularly common between two parties that have done business together in the past, where mutual trust has developed. Unfortunately, disputes do arise. However, just because an agreement or contract is verbal and not in writing, does not mean that it is unenforceable. Having said that, enforcing oral agreements can at times be tricky.
For example, in California, the statute of limitations, the deadline by which a lawsuit would have to be filed in order to enforce an agreement, is shorter with oral agreements than with written contracts.
A common dispute that arises in an oral agreement is a dispute relating to what the parties agreed to (i.e., what are the terms of the agreement). In California, if there is a dispute relating to the terms of an oral contract, the court might look to the parties’ own conduct in performing the agreement prior to the dispute developing. Additionally, if the parties have done similar transactions in the past, the court may also look to the parties’ prior “course of dealings” to assist the court in interpreting what the parties agreed to when they entered the disputed oral agreement.
Oral agreements can be commonplace in business. There are a lot of differences between oral agreements and written contracts, and their enforcement, including the shorter statute of limitations. It is important that if a dispute arises relating to an oral agreement, that you act quickly to enforce the oral contract. If that is your situation, it is important that you promptly consult with a contract attorney to determine what steps you need to take to enforce the oral contract, and in the construction setting, there may be additional courses of actions available to you in enforcing the oral agreement, in addition to the filing of a lawsuit to enforce the agreement. Therefore, it is recommended that once a dispute arises, that you immediately consult with a capable contract attorney.
I regularly represent clients in the East Bay, in Oakland, California, and in Walnut Creek, California, in contract disputes. If you have questions, or need representation by a California business or contract attorney involving a dispute regarding an oral agreement or a written contract, please feel free to contact me to discuss your case or to arrange for a consultation. I can be reached at (510) 465-0025 or (925) 708-3306.