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We’ve got an Oral Agreement, Uh oh…


With the economy the way it is, I’ve had a lot of clients come to me recently attempting to enforce an oral agreement. I’ve seen contracts as high as $200,000.00 which were done on a handshake. Now a handshake is nice, I appreciate a strong firm grip as much as the next person. But is it worth to have to litigate the issue when the deal goes south? It is ALWAYS best to have a writing signed by the parties. But, what to do if this advice comes too late?

Now, oral agreements can be enforceable, under certain conditions. First of all, you’ll have to establish that the agreement actually existed, which is easier said than done. Even if you can do that, you’ll have to ensure that the subject matter of your contract does not fall within what’s called the “statute of frauds.”

The statOral Agreementute of frauds, which is enforced in North Carolina, is a requirements that certain kinds of contracts be memorialized in a signed writing. Essentially, there are certain subject matters which cannot be subject to an oral agreement. This is state specific, although most categories are subject to the statute of frauds are the same across states, some are not. In North Carolina, these categories of sales are subject to the statute of frauds:

1. Leases of Real Property longer than 3 years;
2. Easements of longer than a year;
3. Mortgages or Deeds of Trust;
4. Interest in land (note, this does not refer to building something on land; this refers to the land itself);
5. A suretyship promise, which is a personal guarantee by a non-party to the contract;
6. Marriage;
7. The promise of an executor to an estate to pay debts out of his own funds;
8. Covenants not to Compete; and
9. A sale of goods by a merchant of greater than $500

If your contract falls within those subject matters, all essential terms of the contract must be in writing which includes the subject matter, the price, quantity, consideration, and the signature of the parties. Else the contract will be unenforceable.

If you are not within one of these categories, your oral agreement can be enforceable. But these are still hard to prove, GET A WRITTEN CONTRACT. Having one written by a lawyer is helpful, but at least get something on paper which sets forth the essential terms of the contract: the subject matter, price, and quantity.

If you need assistance with the enforcement of a contract, whether an oral agreement or written, or defense against the claim that you have breached a contract, contact Edward Maginnis at Maginnis Law, PLLC. Maginnis Law, PLLC services Raleigh, Cary, Apex, Holly Springs, and the rest of the Triangle area. Contact the firm at 919-526-0450, email us at info@maginnislaw.com or visit our website at www.maginnislaw.com to schedule an initial free consultation.

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