When does a promise become a contract?

| Dec 10, 2020 | business law | 0 comments

Contrary to common belief, it is possible for the courts to enforce an oral contract. This is why you must be very careful when talking about potential business offers or deals with other parties. It is possible that you may make legally binding agreements without knowing you are doing so.

Fortunately, it is relatively simple to police your speech and emails for this. According to FindLaw, a statement becomes a contract at the moment one party causes a second party to rely on the statement in a manner that results in the second party experiencing financial injury.

What if there is no record of the agreement?

This is the case with many oral contracts. Of course, since there is no written record of spoken words between persons, these debates often evolve into a he-said-she-said battle.

However, if the plaintiff can prove that he or she suffered financial loss by relying on a statement made by the defendant, then the courts will side with the plaintiff. It is on the plaintiff to furnish proof of the agreement, which can be difficult to do. The plaintiff can not only offer evidence as to what the words were that formed the oral agreement, but can also support his claim by providing evidence as to how the parties behaved after the agreement was formed.

What is an example?

For example, you might ask your neighbor to watch your children every weekend for the next year for an agreed amount of money. Since your neighbor takes you at your word that you will give him this income, he quits his weekend job.

If it turns out that your sister is moving back into town, so a month later you tell your neighbor you no longer need his babysitting services, he would be able to take you to court for financial injury because he quit his other job. If he prevails in the court action, he would probably be awarded the income he would have earned if you hadn’t prematurely terminated his services.