Legal Question in Business Law in California

Re: Verbal Agreements

The validity of verbal (or to use the preferred term, oral) agreements is governed by statute for the most part, and depends upon the subject matter.

To touch upon the highlights:

1. A written instrument is required to convey an interest in real property.

2. A partnership can be created and defined by an oral agreement or even implied from the facts of the parties' dealings with no express agreement at all.

3. Sales transactions are governed by the California version of the Uniform Commercial Code, which provides that sales of personal property of $5,000 or over (or of $500 or over in the case of "goods") are not enforceable "by way of action or defense" unless there is a writing signed by the person to be charged memorializing the transaction. This is the modern enaction of the old Statute of Frauds. There are numerous statutory or common-law exceptions, however.

4. Finally, there are (see Calif. Civil Code section 1624) the old traditional Statute of Frauds writing requirements: (1) an agreement which by its terms cannot be performed within one year; (2) agreements to be responsible as a guarantor for the debts of another; (3) several others probably not applicable here. Please be aware that the Statute of Frauds is not a highly favored defense, and the courts have created numerous exceptions to it and just about anything can and has been accepted as a "writing" that will satisfy the statute.

Re: Verbal Agreements

Mr. Whipple's answer is correct but it presumes the reader already knows a thing or two about contract law.

There are requirements any agreement has to meet in order to be a legally binding contract. Aside from the exceptions Mr. Whipple listed, being in written form is *not* one of these requirements. A written document is evidence of what the parties agreed, but it is the agreement itself that matters and in most instances the agreement will be equally binding whether it is written or oral.

Many agreements do not meet the legal requirements for a contract, so even if such an agreement *is* written down the courts will still not treat it as a contract.

The bottom line is that oral agreements *can* be legally binding contracts but are not necessarily. Whether such an agreement is a contract usually depends onlu upon what it says and not on whether it was written down, aside from the situations Mr. Whipple described.

Re: Verbal Agreements

The general rule is that verbal agreements can be enforced just like written agreements. There are some exceptions to this as you have probably seen in the other replies by other attorneys.

However, there are realistic problems with verbal agreements starting with what, exactly, is the agreement. You will say one thing while the other side is likely to say something else.

Depending on how the parties actually carried out the agreement, if they did, will likely govern the enforceability of the contract.

J. Caleb Donner

DONNER & DONNER

LEGAL WARRIORS�

325 E. Hillcrest Drive, Suite 242

Thousand Oaks, CA 91360

Tel: 805-494-6557

Fax: 805-494-0990

email: [email protected]

website: www.legalwarriors.com

Re: Verbal Agreements

Need more facts... You may contact me.