You might be surprised how frequently business is conducted on the basis of an agreement that is not in writing. All sorts of agreements, large and small, valuable and nominal, are routinely negotiated and performed on a verbal basis. But when a dispute arises, the first question I am asked is generally, “can I sue on an oral agreement?” The answer is an emphatic probably. The law does identify certain categories of agreements that must be in writing, such as those pertaining to the sale of land or the guarantee of the debts of another person. But the vast majority of business agreements do not have to be in writing to be considered legally valid and enforceable.
Invariably, even where both sides agree that an oral agreement exists, they still disagree about its terms. So how do we go about proving the precise terms of an oral agreement? There are a number of ways. First, the parties to the contract themselves testify to their understanding of the terms of the oral agreement. Second, we carefully examine the parties’ words and conduct, particularly statements and conduct that predate the dispute. This requires a careful examination of the parties’ transactional documents and communications. Third, we often rely upon industry standards, custom and usage to determine what the parties likely understood when they entered into the oral agreement.
Carefully examining the potential claims and evidentiary challenges that exist is vital to the successful prosecution of a claim and the development of a winning strategy. This requires a thorough investigation prior to filing suit.