Here’s how a verbal promise might be deemed a binding contract

On Behalf of | Jul 27, 2020 | Firm News |

Contracts are a powerful tool in the business world. They can ensure that your employees perform their duties in accordance with your standards, lock in prices for needed goods and services, and even dictate how you can use your commercial property. Language is a slippery thing, though, which is why carefully drafting these documents is critically important to ensure that any ambiguities aren’t construed against you in the event that a dispute arises.

But what happens when there is no written agreement? Can a verbal promise constitute an enforceable contract? The short answer is “yes,” but it really depends on the circumstances at hand. If a dispute over a verbal contract winds up in court, then the following factors may be considered:

  • Whether an actual offer was made
  • The reasonableness of the promise, noting that outlandish or obviously one-sided promises probably weren’t meant to be binding
  • Whether there was detrimental reliance, meaning the party that acted on the promise as a contract was financially harmed in some way by relying on the verbal promise
  • The historical business relationship between the parties, such as whether there were similar verbal agreements that were acted upon in the past

That might sound easy enough to analyze, but these factors leave a lot of room for legal argument. To succeed in enforcing a verbal promise as a contract, you’ll likely need evidence to support each of these factors. Detrimental reliance is a big factor, so you’ll need to demonstrate how you were harmed by the other party’s failure to live up to the promise. Such reliance might occur if you forewent a contract with favorable terms in hopes of the verbal promise coming through, but now those terms are gone and only less favorable ones are available.

Contract disputes can get heated, but you might be able to settle any disputes before even heading to court. Before negotiating these disputes, though, you need to be prepared with strong legal arguments to support your position. In fact, it’s often best if you’re prepared for trial before even sitting down at the negotiation table. You can’t be afraid of litigation.

So, if you think you need assistance in dealing with your contract dispute, then it might be time to reach out to a legal team that is experienced in handling these matters.