Legal Question in Business Law in California

Re: broaken oral contract

Oral contracts are binding except in limited situations where the law specifically requires the contract, or some memo thereof, to be in writing and signed by the person to be charged (sued).

Typical examples (not a complete list) of contracts that cannot be oral and must be in writing are:

(1) Contracts for purchase or sale of real estate;

(2) Leases of real estate for more than a year;

(3) Contracts regarding marriage;

(4) Contracts not to be performed during the lifetime of a party;

(5) Contracts which absolutely cannot be performed in less than a year;

(6) A promise to be responsible for the debt of another;

(7) Most loan commitments in excess of $100,000;

(8) Contracts for the sale of goods exceeding $500 (with exceptions).

This is the so-called "Statute of Frauds" and over the years courts have created a number of loopholes to allow enforcement of oral agreements that theoretically should have been in writing. Judges often find ways to protect people who have lived up to their side of an oral contract and where the other party attempt to hide behind the defense of the Statute of Frauds.

Re: broaken oral contract

Mr. Whipple's answer correctly explains what types of oral contracts can be valid, but you should keep in mind that not all such contracts necessarily *are* valid. Whether a given contract is valid depends not just upon whether it is written or oral but also upon what it says. Even written contracts can say things that make them illegal or unenforceable, and the same is true of oral contracts.