Oral contracts are contractual agreements made entirely on the basis of spoken communication (Stim, 2016). This is dissimilar to a written contract, where the existence of a contractual agreement is evidenced by a written document. Whereas written contracts are the norm, oral contracts are fairly commonplace. Indeed, many powerful individuals have participated in handshake deals. However, there is often controversy over whether oral contracts are legally enforceable. This paper discusses the concept of oral contracts in the U.S. and explains the extent to which they are legally binding. Attention is also paid to the notion of implied contracts.
Concept of Oral Contracts in the United States
In the U.S., contracts for the sale of goods or services and commercial transactions are governed by the Uniform Commercial Code (UCC) (Tepper, 2014). The UCC stipulates provisions for the enforceability of oral contracts. As there is no federal law governing contracts, the UCC provides guidelines for states to follow when dealing with contracts. All 50 states as well as the District of Columbia and U.S. territories have adopted the code, albeit with varying levels (Klass, 2010). For instance, some states like Louisiana have not adopted all the provisions of the code.
The UCC acknowledges oral contracts as legally binding agreements expressed in spoken communication as opposed to writing. The code provides that only certain types of contract need to be in writing (Tepper, 2014). Indeed, the UCC mandates written contracts in only a few circumstances. These circumstances are mainly stipulated under Article 2 of the code. Essentially, the UCC grants that contractual agreements are generally unwritten. Even so, written contracts remain far more popular than oral contracts.
Are Oral Contracts Enforceable?
Contrary to common belief, oral contracts could be legally binding agreements. The contracts are enforceable...
References
Klass, G. (2010). Contract law in the USA. The Netherlands: Kluwer Law International.
McKendrick, E. (2014). Contract law: Text, cases, and materials. 6th ed. Oxford: Oxford University Press.
Stim, R. (2016). Contracts: The essential business desk reference. 2nd ed. U.S.: Nolo.
Tepper, P. (2014). The law of contracts and the Uniform Commercial Code. 3rd ed. Boston: Cengage Learning.
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