Friday, December 3, 2010


The answer is yes, if you can prove what the terms were to be. Often, however, the parties to an oral contract have widely divergent views on what those terms were. Today, for example, we settled a case involving a verbal agreement to establish a joint venture to form and operate a new company. The parties to the case, and to the agreement, all invested substantial sums of money and the fledgling business incurred substantial sums of debt to get off the ground. One of the parties ceased making capital contributions to the new business after investing hundreds of thousands of dollars because in his view he had contributed all that was required under the agreement. The other party had quite a different understanding of the “agreement” and expected the other to fund the new business indefinitely. After spending tens of thousand of dollars in attorneys fees and other expenses, including international travel for one of the parties, the settlement that was reached was for each party to simply walk away from the litigation chalking up their respective losses to a bad business decision. Neither party could risk continuing to fund the litigation in light of the uncertainty of the terms of the oral agreement. Had the agreement between them been reduced to writing, one party or the other could have been more confident in the terms and the remedies available.

Are verbal contracts enforceable? Yes – but, they’re also worth the paper they’re written on.

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