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Analyzing whether a verbal promise is an enforceable contract

| Oct 30, 2020 | Business Law And Litigation |

A contract is the best way to solidify your business dealings. A well thought out agreement can contain provisions that speak to the most prevalent issues, such as sale price and quantity of goods or services exchanged, but they can also identify contingencies and other issues that you might not think of at first glance. Yet, with so many small businesses trying to cut costs, it’s inevitable that some of them conduct business based merely on verbal promises. If you’re in this situation and feel like you’ve been wronged, then you might be asking yourself whether a verbal promise can be legally enforced.

Are verbal promises legally enforceable?

It depends on the facts at hand. First, you have to consider whether an offer was actually made. The terms of that offer have to be reasonable, too. If a business offers $100,000 worth of goods for $10, then a court probably isn’t going to consider the offer to be legitimate. So make sure you’re able to put the offer in context.

Another characteristic of the promise to be taken into consideration is prior business dealings. If you’ve conducted transactions with the same party based on verbal promises before, then a court is more likely to deem the promise legally enforceable. With this aspect, then, try to document all of your business transactions to demonstrate a pattern of behavior and expectations fulfilled.

Perhaps the most important quality in favor of rendering a verbal promise an enforceable contract is detrimental reliance. This means that the part who accepted the promise was harmed in some way by relying on that promise. That might be shown by a missed opportunity for the same type of transaction or a loss of revenues due to an inability to provide goods or services due to the unfulfilled promise.

Be ready to negotiate and litigate

These cases can be very complicated, but there can be a lot at stake, especially if you’re a small business with little room for error. To best protect yourself in these matters, you need to have a full understanding of the law and how it applies to your set of circumstances. For that, an attorney who is experienced in business law can be enormously beneficial.