Enforcing An Oral Contract With A Friend Or Relative

6 March 2015
 Categories: Law, Blog

Oral contracts are legally binding, but the rub is that it is hard to prove that an agreement exists between the two parties. You may have made an oral agreement with a friend or relative because you trusted them, and now regret it for various reasons. You should expect the other party to live up to their end, particularly if the agreement involved a significant amount of money, or other property.

Understanding the Dynamics

When you help someone out, you probably expect some gratitude, respect, and good treatment, especially if you are loaning them money, selling a business or selling items on payments.

However, an agreement like this can put you in the unfortunate position of being the enforcer. It can also mean that mutual relatives or acquaintances may choose to take sides without knowing all the details. Resentment can develop when the other person has forgotten the terms, or feels that their situation has changed and that you shouldn't "harass" them.

Also, your friend/relative may have overestimated their abilities, and are regretting making the agreement. If you sold them a business that includes certain materials that are perishable, they might not have been able to sell or use them by the expiration date. They may naively expect you to take the loss instead, even though in the "real world" they would still need to make payment(s) whether the goods were used/sold or not.

Working Out Issues That Come Up

The first thing you should do is talk to the person in a reasonable manner and remind of the terms of your agreement. Ask them if there was something they didn't understand. Listen to their side and be willing to compromise somewhat if the situation truly has changed. Consider whether payments could be made smaller over a longer period of time. This time do get it in writing, and make sure each person has a copy.

If things can't be worked out, you might want to try mediation. A mediator is a person trained to help two sides come to an agreement or resolve a dispute, without taking sides.

Going To Court

Going to court should be your last resort. Before you go, you should gather any evidence that an agreement was made, have a list of any witnesses to the agreement to bring to court, and take along a record of discussions and communications you had with the defendant about your expectations. These include phone calls, emails, letters, and more. If you have any canceled checks or receipts of payments initially made in the agreement, these can be acceptable evidence that your agreement did in fact exist, and your friend/relative was aware of the terms. You should also include any proof that you have that you were keeping your side of the agreement.

If the value of the case is small, you can prepare and present it yourself in small claims court. The total amount that you can sue for varies from state to state. If the amount you are suing for is not much above the state limit, you may choose "waive the excess" which means to reduce the amount you are asking for so it is acceptable to the court. Small claims court can only be used to recover money. You can't use small claims court to force someone to live up to some other kind of terms.

Finally, if the monetary amount or other terms of the agreement represent a loss you can't reasonably be expected to bear, you will need to consult a civil law attorney like Morgan Law PLLC to explore other options to hold the other party accountable. The whole process can be difficult, but you eventually may earn some grudging respect from the people involved, by being firm in your resolve.