Legal Question in Business Law in California

Are Verbal Agreements Binding In California

My company was hired to an event for a company. At the last minute the company did not sign the contract and cancelled us. After stating they needed to hire someone elses vendor within their company for political reasons. This was after my company had done all the work and purchased speciatly equipment for their event. I am asking them to re-pay us for the specialty items. And 20% of the total invoice for the work already completed.

Asked on 1/25/08, 9:09 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Are Verbal Agreements Binding In California

Verbal contracts, or oral contracts as they are legally termed, are valid and enforceable the same as written contracts, with a few exceptions, and then there are exceptions to those exceptions. The end result is that most oral agreements can be enforced when and to the extent the plaintiff can convince the trier of fact (judge or jury) of the essential facts - the existence of the contract, the parties, the principal terms, and the fact of a breach by defendant resulting in compensable harm to plaintiff.

The most-often occurring exception to the enforceability of oral contracts is that contracts conveying an interest in real property must be in writing, except when an exception is available!

There are also some dollar-value limits to oral contracts for goods. I think if I remember correctly the so-called statute of frauds requires that contracts for sale of goods in excess of $500 must be written or confirmed in writing, but among the exceptions is that if the defendant admits the existence of the contract, it can be enforced. If you have some of the cancelling company's excuses in writing - even e-mails may suffice - you may be able to overcome the written-contract requirement for a sale of goods over $500. Also, if the services element of your oral contract was more significant than the supply-of-goods aspect, the entire contract is probably not within the statute of frauds for sales of goods.

Winning an oral contract suit imposes an extra burden of proof, because you have to work harder to establish the facts, and there is a two-year rather than four-year statute of limitations, but oral contract suits are brought and won all the time.

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Answered on 1/25/08, 9:30 pm

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