Efficient And Effective Business Litigation

Are verbal promises legally binding contracts?

On Behalf of | Jun 25, 2021 | Contract Disputes |

A lot of small businesses take pride in the work that they’ve put in to build strong, trust-based relationships both with other businesses and with their customers. But these relationships can be put to the test when promises are made and broken and financial harm results. In many instances, businesses are protected by formal contracts that clearly define the obligations of the parties, but in other instances the agreement in question was only made in a verbal fashion.

Is a verbal promise legally enforceable?

Depending on the circumstances, a court may find that a verbal promise is a legally enforceable contract. To make that determination, though, a court will look at a number of factors. To start, the court must consider whether an offer was actually made. This means analyzing the context of the offer and whether it was realistic in nature.

The court will also look at how agreements amongst the parties have been handled in the past. If there’s a history of making and adhering to verbal promises, then the court is more likely to find that a subsequent verbal promise is enforceable.

Detrimental reliance

Perhaps the most important factor that will be considered by the court is whether the harmed party relied on that promise to its detriment. For example, consider a business that relies on a supplier’s verbal promise that goods will be delivered at $5 per unit and as a result foregoes a contract with another supplier at $6 per unit. The first supplier doesn’t live up to its verbal promise to deliver at $5 per unit, and the second supplier has withdrawn its offer. Now the business is left with limited options and ends up contracting for delivery of the goods at $8 per unit. Here the business has suffered harm as part of its detrimental reliance on the verbal $5 offer.

Don’t let your business get taken advantage of

Time-and-again we see businesses suffer significant harm simply because they don’t know their rights under the law. Don’t let that happen to you. If you’re facing a contractual dispute, then now is the time to discuss your situation with a qualified legal professional who can help you develop the strategy that you need to protect your interests.