When Is Verbal Agreement Binding?
My friend had a verbal agreement with her leaser (on a lease-to-own property)to have a check cut for $50,000 of the equity in her house to put a downpayment on a business.
My friend then signed a purchase agreement based on this monetary agreement consisting of her equity in the house she leases.
After hearing the seller would accept the offer, the leaser of her house backed out of the agreement, saying her husband didn't think it was a good idea.
Since my friend signed the purchase agreement based on the verbal agreement for a $50,000 equity check, can the leaser legally change her mind?!
"When Is Verbal Agreement Binding?"
Only when its written down and signed.
Now if that person is an honorable person and ADMITS under oath that they said that, it "might" be.. I say might because that person may not have the authority to speak for her spouses interests and from what you say, it sounds like that is exactly the case. (or they may be slicksters and pulled a bait and switch on you) That's why its a good idea to talk to co-owners at the same time to be sure there is a meeting of the minds.
Is her agreement enforceable? I would say legally maybe, depending on if the judge/jury believed that your friend was misled or misrepresented, whether it was intentional or not. I doubt they would try to enforce that contract if they actually did reneg on a verbal agreement that affects the value of the contract.
I would just write them a registered letter, telling them that their agreement was dependent on them doing what they said they would do and since they couldn't do that, you cannot go forward with this agreement as written, but if they wish to renegotiate the terms of the contract we can start from there.
good luck,
G
The husband and wife are not considered co-owners, to my knowledge. The lease / purchase has been active for 12 years - her marriage to this person is about 2 years old!
Does this make a difference?!
Yes, I would say absolutely that makes all the difference in the world.
Now this is the trick, getting her to admit, in writing that she did in fact say that then.
If she does admit in writing that she did indeed promise say that. then YES, you could enforce it and I most certainly would. Just ask her to explain why did she say that then? and what happened betweeen the time she promised you this and now? Maybe she will start by saying, Well, when I said that I would let you pull your equity out of the house I wasn't thinking about 10 years later. I don't know that you need to send it registered mail yet, I would try to keep it as casual as possible to keep her from moving into a purely defensive posture. If you act just concerned but not angry maybe she will be forthcoming. If she denies ever saying that. It's pretty much a lost cause.
good luck,
G
shpammroid,
An overview of contracts
by Robert Gerrish
Generally, there are three types of contracts –
written, verbal and a mixture of both. Legally
speaking, most contracts do not need to be in writing
to be binding. Moreover, a written contract makes the
most sense for a business arrangement.
Written contracts
Writing it all down makes the contract tangible. Both
parties can see it and touch it – although it can be in
electronic form rather than printed on paper. Having an
agreement in written words means there is little room
for ambiguity about the terms - less opportunity for
conflicting assumptions or misunderstandings.
A written contract also means neither party has to rely
on their memory of what was originally agreed. If
representatives for either party change over time, a
written contract can easily and clearly convey the
terms of the agreement to new people.
The law seems to give precedence to a written
contract that appears to be complete, over a
contradictory verbal agreement.
Verbal agreements
While verbal agreements can be just as binding as
written ones, they can be difficult to prove and open
to misunderstanding.
However, it is not always appropriate to insist on a
formal written agreement, particularly when the
financial value of the arrangement is quite small.
In some cases, providing a large and complex
document may simply lead to more questions and
uncertainty, and ultimately hamper the progress of the
transaction. A simple, less intimidating form of
agreement can be just as effective, where you are
confident of the other party’s good faith. Often in such
cases simply a letter from you to the client confirming
what you'll doing, for how long and at what cost is a
good path to follow.
Having noted that verbal contracts can be difficult to
prove, it’s also dangerous to assume that they can
never be proved. The conduct, specific actions of the
other party and past dealings with them can be used
to support a verbal agreement.
Mixture
A formally written and signed contract is assumed to
contain all the agreed terms of the parties, regardless
of what may have been agreed verbally. However,
contracts can be a combination of written and verbal
agreements when the written part contains very
limited terms.
Verbal undertakings and conduct will be considered if
a written contract does not appear to be complete.
Avoid ambiguity
In summary, the rule of thumb is to be as
unambiguous as possible. If your agreement is verbal,
make occasional checks that both parties’
understanding of the arrangement remains consistent
with the original plan.
If you have a totally informal arrangement with
another party, consider formalising some of it. And if
you have any concerns whatsoever about the good
faith of another party, insist on a formal written
contract.
NOTE: Always talk through financial issues with your
accountant and contractual issues with your lawyer
before making decisions.
HopeThisHelps....
....as always,
GoodInvesting, Rocky
Contracts,
Most contract laaw is governed under the uniform commercial code.
a verbal contract is not as enforceable as a written one though technically binding.
That said the following contracts must be in writing to be legal and inforceable:
All contracts lasting over 365 days in duration
Contracts involving real property must be in writing.
On this deal it must be in writing and you won't be agle to enforce the contract on just a verbal agreement.
This is first semester business law 101
Get it in writing![ Edited by Stockpro99 on Date 07/27/2003 ]
research your states stautes, in particular the "statue of frauds" In most states any transaction involving real property in an amount greater than $500.00 must be in writing to be enforceable.
wow, we have alot of legal opinions here today. some right, some wrong. let me see if i can shed some light (I am an attorney)
1) The law of contracts is NOT necessarily predicated on the Uniform Commercial Code. In fact, in many instances the UCC is completely inconsistent with traditional contract law.
Contract law was around well before the UCC was written. Article 2 of the UCC is where you would look, for example, if you had contract to purchase goods (personal property) from a merchant. It has NO application to real property.
2) I disagree with the discussion that an oral contract is OK in this case. All contracts for the conveyance of an interest in real property MUST be in writing. This is a basic principle of the statute of frauds (which has nothing to do with fraud). I sincerely doubt, as indicated by a previous post, that an acknowledgment by the seller (a/k/a an admission) of an oral contract for the sale of real property would make a difference.
The question is whether the contract itself was in writing. It either was or wasn't. Yes, there are exceptions to this rule such as where there has been detrimental reliance or where there was fraud. But your post doesn't mention anything about this.
If you have legal questions my advice is to speak with an attorney who is admitted to practice in your state.
J
shpammroid's original description of the situation seems to indicate that the promise to cut a check for $50,000 was not a conveyance of real property, but more like a loan using real property as collateral. I'm not certain that it would fall within the statute of frauds rule requiring a writing.
Even if the oral contract was valid and enforceable however, it would require proving the terms of the oral contract with clear and cogent evidence. This is always a challenge. It never hurts to get it in writing even if a writing is not required.
I second the recommendation to contact a local attorney for advice specific to all the facts and the relevant law involved.
Can your friend prove, with any written & signed document, or by any living witness, other than herself, that the lessor DID agree to make her a $50k loan?
If so, that NOT being a per-se RE deal, I think if it were my client, I'd take it on and sue the non-performing lessor. His default has cost your friend some damages in lost opportunity, etc., and I think a court would probably compensate her for same; plus attorney's fees and court costs, if that state's laws so permit.
Law of Conrtracts is MUCH older than UCC, and I suspect there are many gray areas on which no UCC rule or decision yet, but on which there are myriad of contract decisions. This is not an area where I'm any kind of quotable expert though.
Friend of course needs to find a business & contracts lawyer where the lessor lives, as that's where any suit would likely be filed...although it could legally, under laws of conflicts, probably be maintained in state of provable agreement's having been made. Usually most any lawsuit might be brought in more than one state.