Is an oral contract binding?
By: J. Matthew Kelly, Esq.
Clark, Campbell, Lancaster & Munson, P.A.
Many individuals today still conduct business or enter into agreements with handshake deals or oral statements. Generally speaking, oral contracts are enforceable in Florida. However, there are some exceptions which make certain oral contracts unenforceable.
Was a contract formed?
The first question that needs to be answered when addressing whether an oral contract is enforceable is – was a contract formed?
An oral contract is formed when (1) an offer is made, (2) the offer is accepted by the other party, (3) the offer and acceptance are supported by consideration, and (4) essential terms of the agreement are specified.
An example of a basic oral contract is as follows:
John Smith verbally offers to mow Jane Doe’s lawn tomorrow for $100. Jane Doe thinking this is a great deal accepts this offer by verbally stating to John Smith that she accepts the offer.
John Smith and Jane Doe have entered into an enforceable oral contract. John Smith made an offer to Jane Doe. Jane Doe accepted this offer by orally communicating affirmation. Legal consideration is generally something bargained for and received as part of the agreement. Consideration can include property, money, a return promise, an act, or even forbearance from an act. In this example, the consideration is the $100 which Jane Doe promised to pay to John Smith in order to induce him to take the action of mowing her lawn. Finally, it is not necessary that all terms be identified but that essential terms be defined so that each party understands what is expected of them under the agreement. Here, the essential terms are present – actions to be taken, amount of payment, location, and time of performance.
This is a simple example of an oral contract; however, oral contracts can be created and enforceable for far more complex transactions – such as the loaning of substantial sums of money, construction, or even the sale of a business.
When are oral agreements not enforceable?
Some common transactions which must be in writing are as follows: any contract for the sale of land or real estate, any lease lasting longer than one year, any agreement that cannot be performed within one year, an agreement that is not to be performed within one year, agreements to pay the debts of another, and agreements for sale of goods valued at $500.00 or more.
While oral contracts are generally enforceable in Florida, it is recommended that any agreement be put into writing and signed by the parties involved to ensure that that expectations and requirements of the parties are clear and can be specifically recalled in the event of a dispute. It is recommended that you have an experienced attorney review any agreements before they are entered into. Having an attorney review contracts prior to execution can help the parties avoid future problems and future expenses. Finally, if you face a situation where you need to enforce an oral or written contract, or someone is seeking to enforce a contract against you, seek immediate legal assistance from an experienced contracts litigation attorney.
Matt Kelly is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to firstname.lastname@example.org.