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Can a verbal promise be considered an enforceable contract?

On Behalf of | Dec 4, 2020 | Contracts |

Contracts are the foundation of many business operations. Without them, businesses wouldn’t know what to expect from those they transact with, which can create a lot of uncertainty for both businesses and consumers. Most of these contracts are negotiated and reduced to writing in an attempt to ensure that everyone understands their obligations, but are there times when something that’s merely a verbal promise can be deemed a legally enforceable contract?

When a verbal promise becomes a contract

A lot of small business owners take pride in their word and their informal arrangements with other businesses and consumers. While this might simplify things for those involved, it can lead to trouble, especially when one party to a verbal agreement doesn’t uphold its end of the bargain. In these situations, you have to carefully consider the circumstances to determine if the verbal promise can be deemed a valid contract. Here’s how:

  • Determine whether an actual offer was made, meaning that there was some sort of bartered for exchange.
  • Consider whether the bargain was reasonable, as outlandish offers probably won’t be deemed legally enforceable
  • Look at how business has been conducted between the parties in the past, as a history of upholding verbal promises may be deemed enforceable if there was truly an offer and an acceptance of that offer
  • Analyze whether there was detrimental reliance, meaning that one party relied on the verbal promise to an extent that it caused that party harm, such as by missing out on another contract or a big sale

Don’t let legal complexities jeopardize your position

Contract disputes can have a tremendous impact on your business. Therefore, you shouldn’t leave matters to chance. Legal professionals who are experienced in business law know how to appropriately analyze your case and build compelling legal arguments that protect you and your business interest. So, if you’re facing a contract dispute, consider seeking the help you need to deal with the legal complexities you face.