Consequences of a Verbal Business Agreement

In Florida, verbal business agreements are generally legally binding but can be more challenging to enforce and prove than written agreements. If you are a Florida business owner, you know some deals are best done with a firm word and a strong handshake. However, you should also know the laws on verbal business agreements to ensure these contracts are enforceable.

In this post, the BrewerLong team will guide you through the basics of verbal business agreements and how to understand the possible consequences of making them. Read on to learn how we can help you protect your business when entering verbal contracts. Contact us today to speak further about your case with an Orlando contract lawyer.

What Is a Verbal Business Agreement?

A verbal business agreement is a legally binding agreement between parties. These contracts are communicated and agreed upon verbally rather than being documented in writing. In a verbal business agreement, the terms, conditions, and obligations of the agreement are discussed and agreed upon through spoken communication.

While verbal agreements may be legally enforceable in Florida, enforcing them can be challenging. Without a physical record of the agreement, it is difficult to demonstrate what was agreed upon and under what terms. Verbal agreements are also susceptible to misunderstandings, misinterpretations, and memory lapses, leading to disputes.

Can You Make a Binding Verbal Business Agreement in Florida?

Under Florida’s Statute of Frauds, certain agreements must be in writing. These include:

  • A property lease that extends beyond one year,
  • Contracts for real estate transactions,
  • Agreements that guarantee another person’s debt,
  • Contracts that cannot be performed within one year from the date of the agreement,
  • Agreements to purchase goods valued at $500 or more, and
  • Media subscriptions like newspapers and magazines.

For example, if you decide to purchase an apartment and then lease your new apartment to your friend, both contracts must be in writing. The Statute of Frauds helps ensure contracts for large amounts or that must be completed over long periods are valid.

What Are the Challenges of Making a Verbal Business Agreement?

Most verbal business agreements are valid and enforceable for contracts outside the Statute of Frauds. However, you may encounter challenges when completing or enforcing those contracts.

Enforceability Challenges

Verbal agreements can be harder to enforce because they often lack clear documentation of terms and conditions. Human memories are imperfect, and verbal agreements can lead to good faith disputes over what was agreed upon.

Evidence Issues

In a legal dispute, proving the existence and terms of a verbal agreement can be challenging.  The burden of proof falls on the party seeking to enforce the agreement. Unlike written contracts, which provide a tangible record of the deal, verbal agreements rely on the memories and testimony of the parties involved.

Limited Remedies

If you successfully enforce a verbal agreement in court, the available remedies may be limited compared to those available under a written contract. This could impact the amount of damages that can be claimed or the types of relief that can be sought.

How Do You Prove a Breach of a Verbal Business Agreement?

While proving the content of a verbal agreement can be more challenging, to enforce it in court you will need to prove a breach of the agreement. You can take several steps to establish the existence of the verbal agreement and demonstrate that a breach has occurred. Some of these steps include:

  • Document the terms of the agreement in a memo to yourself,
  • Send a text message or email to the other party confirming the contract’s terms,
  • Corroborate the agreement through conduct, and
  • Keep any subsequent communication once the contract has been made.

If the contract is then breached, you can protect yourself in the following ways:

  • Gather evidence, including the messages and memos you have maintained;
  • Consider using expert testimony to prove industry norms that support the verbal contract;
  • Establish reliability through your statements and actions after making the agreement; and
  • Engage an attorney specializing in contract law at the first sign of breach.

Remember that the success of proving a breach of a verbal agreement will depend on the strength of the evidence you can provide and of Florida’s contract laws. Again, while verbal contracts can be valid agreements, it is generally wise to reduce important agreements to writing whenever possible to minimize the risk of disputes and increase the likelihood of successful enforcement.

How BrewerLong Can Help

While certain industries rely heavily on verbal contracts, working with written agreements can provide clarity, protection, and a solid legal foundation in disputes. If you are entering or enforcing a verbal contract, contact the BrewerLong team today to discuss your options. We have been helping Florida business owners navigate contract law for nearly two decades, and can help you too. Contact us online or by phone today.

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