When it comes to California contract laws, oral or verbal contracts are typically valid and enforceable. However, in some circumstances where the uncertain nature of oral agreement compromises the contract, a written record be required in order to make it legally binding.
The California Statute of Frauds is a set of statutory provisions that outline many specific circumstances where an oral contract will be deemed unenforceable. The idea behind these provisions is to reduce the probability of fraud. Essentially, these statutes require a written record of the terms agreed-upon by the contract's parties.
According to California contract laws, the following types of transactions are invalid without supporting documents (written agreements):
- A verbal agreement where the terms and actions outlined cannot be performed within one year of the contract's creation
- A pledge to repay or answer for the debt, miscarriage, or default of another individual
- An agreement for the sale of real property, or an agreement for a lease that lasts longer than one year
- A promise or action that is not to be performed during the lifetime of the party.
- An agreement for the purchase/sale of any good where monetary value exceeds $500 USD
- An agreement for the purchase/sale of any personal property where monetary value exceeds $5,000 USD
The aforementioned is only a partial list designed to give readers a better idea of the kinds of agreements that will not hold up in the court of law without a written counterpart.
The list is especially important for anyone who uses oral contracts and would like the reassurance of legal remedies. In other words, a victim of a breach of contract without proper requirements will not be able to use California's court of law to seek restitution.
What Requirements Must be Fulfilled for My Contracts to be Enforceable?
The written agreement used to support contracts that would otherwise be unenforceable also need to fulfill some basic requirements. For example, the written agreement must reasonably identify the subject matter of the contract.
Additionally, it must state the material terms of the agreement at hand. This can be exemplified in the quantity of goods, and the price at which they should be sold. Lastly, it must be signed by both parties in order to show that there is a mutual understanding.
How to Make Sure Your Contract is Enforceable
Unfortunately, there are countless cases of trusting business owners who fall victim to breaches of contract. Even worse, those individuals who are involved in unenforceable contracts are stuck in situation where no legal remedy will be available.
In that sense, the California Statute of Frauds is a powerful reminder that businessmen should seek legal counsel before committing to any important contract. Discussing crucial information and details about California contract law may save people from expensive headaches in the future.
This is a legal blog. It is not intended to be used as legal advice.
For further information please contact the law offices of attorney Ramona Kennedy.
Ramona Kennedy (Attorney) received her Jurisprudence Doctorate in America and is a licensed attorney in California (USA). Ramona Kennedy is a member of Orange County Trial Lawyers Association (OCTA).
Ramona Kennedy is fluent in English and Farsi (reading & writing) & speaks Azeri Turkish.
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