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When Is an Oral Contract Enforceable?

While it’s always best to have a written contract, business moves at such a rapid pace that reducing a contract to writing is often impractical. However, only certain types of contracts need to be written to be enforceable. In Pennsylvania, these include contracts involving purchase and sale of an interest in real estate or of personal property of at least $1,000. Generally, binding contracts can arise in multiple other ways, including oral communication.

The basis of any contract is a meeting of the minds, that is, the mutual understanding and consent of the parties. While the classic hallmarks of a deal are the making of an offer and the acceptance of that offer, a contract can be established by words and conduct reasonably indicating a deal has been struck. For example, leaving a car with a mechanic for regular maintenance may constitute an agreement to have parts replaced if necessary.

Another essential part of any contract is performance, namely the provision of goods or services by one party for another.

Equally indispensable is consideration, which is what one party gives up in return for the other’s performance. This can be in the form of payment or something else of value. Without consideration — also known as a quid pro quo — a promise of performance is deemed unilateral and not binding.

In Pennsylvania as elsewhere, courts strongly favor protection of contractual rights and will usually grant wide latitude to parties seeking to enforce them. Proving the elements of an oral contract can be difficult, but it is not just a question of each side’s version of events. A pattern of conduct — such as a history of prior dealings between the parties — can lead a court to find that an agreement existed. For example, the provision of a regular service, such as waste pickup and disposal, to a customer over several months or years and the customer’s regular payments for the service can constitute a general agreement that the provider would reasonably expect to continue unless and until terminated.

Other evidence of an oral contract may be exchanges of phone calls, texts or emails concerning the subject of the alleged agreement. Delivery of goods or services can indicate that they were requested, though the receiver can rebut this inference. Actions taken in reliance on the alleged agreement can also serve as evidence. For example, a retailer may advertise a sale of goods it expected would be delivered by a wholesaler, based on an oral agreement.

If you are faced with another party’s breach of what you consider a valid agreement, do not hesitate in seeking help from a skilled business services attorney. Call Feldstein Grinberg Lang & McKee, P.C. in Pittsburgh at 412-301-7395 or contact us online for a consultation.

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