Enforceability of verbal contracts in MD

Verbal contracts are often attractive because they are informal and friendly. However, disputes may be difficult to prove in court.

Contracts have such a wide prevalence in business today that many people take them for granted. It was only a few decades ago that verbal contracts were commonplace; however, verbal contracts are still used today in many situations. Does this mean that it is a good idea to enter into a verbal contract with someone, instead of a written one? Business owners and consumers in Maryland should be informed of both written and oral contracts before making an agreement.

Why choose a verbal contract?

Contract disagreements can result in many legal issues for companies and customers. Even so, many decide that a handshake and oral agreement is as good as getting it in writing. Verbal contracts are not as common in formal business arrangements and may not be legally enforceable if there is a dispute. However, they can still be considered legally binding in some situations.

The informal nature of a verbal contract makes them more attractive to small business owners, self-employed contractors and people who do business as friends, states the Houston Chronicle. The owner of a mom-and-pop shop might have an informal agreement with a neighboring business to trade goods and services. Someone who designs website artwork from home might agree over the terms of a minor job with a customer on the phone. A seamstress might say yes to sewing a bridesmaid dress at a discount for her best friend.

If these situations end in each party being satisfied, then a verbal contract has worked out just fine. However, if, for example, the website artist was not paid for his work, he might have difficulty bringing his complaint to court. If the bridesmaid's dress was different from the one she agreed upon with her friend, she might feel it is unfair to pay. Not only can agreement disputes over verbal contracts be difficult to enforce in court due to lack of proof, they might also destroy friendships and long-standing business relationships.

Understanding the Statute of Frauds

According to the National Paralegal College, the Statute of Frauds limits the enforceability of verbal contracts in the following cases:

· Marriage agreements

· Sale of real estate

· A transaction over $500 or one that is estimated to take more than one year to complete

· Agreeing to take over someone's debt

In each of these situations, a written contract is necessary for the agreement to be legal and binding.

Verbal contracts may be considered more friendly than their written counterparts, but it may be wise to get the agreement in writing, no matter how minor the job. An experienced Maryland business attorney should be able to advise further on contract agreements.