Is a Verbal Agreement Legal?

Is Oral Legal?

Verbal agreements, also called oral contracts, can be legal and enforceable in Michigan, but with some limitations.

Here’s a breakdown:

Generally Enforceable: Michigan law recognizes verbal contracts as valid if they meet the standard elements of a contract: offer, acceptance, and consideration (exchange of something of value).

Statute of Frauds: However, there’s a law called the Statute of Frauds that requires certain contracts to be in writing and signed to be enforceable.

These include:

• Agreements that won’t be performed within one year of making the agreement.
• Promises to answer for the debt of another person.
• Selling real estate.
• Selling goods for over $1,000.

Difficulties in Court: Even if your verbal agreement isn’t subject to the Statute of Frauds, it can be difficult to enforce in court. This is because there’s no written record of the agreement, so it becomes a “he-said, she-said” situation.

To Sum it Up: Verbal agreements can be legal in Michigan, but it’s always better to have a written contract, especially for important agreements. A written contract provides clear evidence of the terms and reduces the risk of misunderstandings or someone backing out of the agreement.

If you’re unsure whether your verbal agreement needs to be in writing or you need help enforcing a verbal agreement, it’s best to consult with an attorney.

What’s the law?

There isn’t a specific MCL dedicated solely to verbal agreements in Michigan. However, the relevant statute that applies to the enforceability of certain contracts based on form is the Statute of Frauds. This is found in the Uniform Commercial Code (UCC) under Article 2 on Sales:

• MCL 566.132 (https://www.legislature.mi.gov/)

This MCL outlines the types of contracts that must be in writing and signed to be enforceable in court. These include:

• Agreements that can’t be performed within one year (MCL 566.132(1)(a))
• Promises to guarantee another’s debt (MCL 566.132(1)(b))

Michigan’s UCC also has a separate provision under Article 2 for the sale of goods:

• MCL 440.2201 (http://legislature.mi.gov/documents/mcl/pdf/mcl-chap440.pdf)

This MCL requires any contract for the sale of goods for more than $1,000 to be in writing to be enforceable.

So, while there’s no single MCL for verbal agreements, these two provisions (MCL 566.132 and MCL 440.2201) are the key ones to consider when determining if a verbal agreement needs to be written down in Michigan.

Real Questions from Real Calls

Question: I made a verbal agreement and shook hands with my friend for a $20 bet that he couldn’t eat a spoonful of cinnamon. He did. Am I legally obligated to pay him?

Answer: Some questions don’t need legal advice. Pay him the $20 and don’t bet anymore.

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