Handshakes and Verbal Contracts: Are They Enforceable?

Although it might seem that handshakes and other methods of verifying informal contracts are going out of style, the question of whether or not they count as a binding, enforceable contract still comes up in court. It is always better to get something in writing, but if you are wondering if that deal you sealed with a handshake (prior to social distancing) is legitimate, this blog will help you answer that question. 

Essential Contract Elements

As with any contract, verbal contracts must involve an exchange between two or more parties. A simple verbal contract could be agreeing to pay your friend $500 for his premium laptop that he no longer uses. After some haggling, your friend agrees to bump down the price from $700 to $500, which is the “offer;” the other half of this simple business transaction is your payment of $500, referred to as the “acceptance.” 

Proving Your Verbal Contract in Court

If there is a dispute arising out of your informal contract and you pursue civil litigation, you have an extra hurdle in court – proving there was a contract in the first place. This is an uphill battle for any parties involved in a contract that has not been put in writing, but the following are ways you can help show the court that there was indeed an agreement:

  • You can show that you attempted to perform your duties as specified under the informal agreement. For instance, you agree to give your friend half of the $500 while he gets the laptop ready. If you are seeking remedies because you were not given the laptop as promised, you could show this as evidence that a contract was created based on your partial performance. 
  • You could present correspondence between you and your friend showing that he agreed to sell you the laptop for the alleged price. Emails or text messages may prove helpful in this situation.
  • You should also consider bringing in witnesses who can support your side of the story. This could include any of your other friends or family members who saw you shake hands with your friend.

Other Considerations for Informal Contracts

In most states, including Michigan and Illinois, certain types of transactions must be put in writing. Real estate sales and agreements that cannot be satisfied within one year are two types of contracts that must be in writing, as well as any transactions involving more than a certain amount of money ($200 for Michigan and $500 for Illinois, generally). Also, the statute of limitations is usually shorter for verbal contracts as compared to written contracts. 

Conclusion

If something has gone awry with any verbal contracts in which you have been involved, get in touch with Attorney Carla D. Aikens today to discuss your options. We continue to offer free initial consultations over the phone; call us at 844-835-2993.