Commonly Asked Questions and Answers About Verbal Contracts in Construction Law
Everyone is, at least, somewhat familiar with the concept of verbal contracts. In fact, most people have made what they think is a verbal contract at some point in their lives. However, verbal contracts are a bit different than what most people expect them to be.
In the construction industry, there are few cases where a verbal contract is a good idea or is even applicable under the law. While it may be tempting to make a contract this way, there are considerations that you must take first. In this editorial, a Portland construction attorney with Cotney Attorneys & Consultants discusses the commonly asked questions and answers about verbal contracts in construction law.
Is a Verbal Contract Enough?
If you’re left wondering whether or not a verbal contract is sufficient for a deal, the answer should be no. When there is doubt, you should get it in writing. From a legal standpoint, the more appropriate answer is that it depends on the circumstances of the deal. Every municipality has its own regulations about verbal contracts. However, there are some general rules that apply.
Verbal contracts are only valid if the deal has a value below $500. Any more than that and the deal is invalid unless it is in writing. This is for everyone’s protection since otherwise, people could claim that anyone made a verbal contract to give up anything. In construction, there are few verbal deals that can be made because of the cost. If the contract involves selling land, then a verbal contract is not allowed under any circumstances. Land sales must be well documented and recorded for them to be valid. The written contract serves as the means of recording the exchange, so it is illegal to sell land without a written contract.
The other general stipulation is that a verbal contract must be limited to one year in duration. This means that any contract that requires more than one year to complete must be written. These stipulations make verbal contracts relatively unusable for construction projects. In any case, construction projects should have written contracts. They are important for many reasons, including that they make contracts easier to enforce. Make it a habit to have all contracts written to protect yourself. If you need help developing contracts, you can always discuss the process with one of our Portland construction attorneys.
Can I Pursue Missing Payments without a Written Contract?
Verbal contracts are just as legal and enforceable as written contracts provided that they meet the basic guidelines for acceptable verbal contracts. This means that you could pursue missing payments without a written contract. However, you may struggle to do so in court.
The purpose of a written contract is to provide evidence of the agreement in clear terms. If you do not have a written agreement, you may need some other type of evidence. Witnesses are commonly used to verify verbal contracts. Any notes that you take about the contract may be admissible, too. Whether that evidence will be enough all depends on the judge in your case. Rather than taking a risk, have your contracts written down so that you have the evidence that you need.
Can a Client Change the Scope of Work on a Verbal Contract?
Verbal contracts follow the same rules as written contracts. If you set a specific scope of work for the contract, then the client cannot change the scope of work without changing the contract. A contract is a contract, and no one can change the scope of a contract without an agreement to amend the contract from both parties.
Verbal contracts are not effective for setting the scope of work. This is because it is hard to be sure that all parties agree to the terms established in the contract. Written contracts painstakingly layout the specifics of the scope of work, which means that there is no ambiguity to the scope of the work that you are expected to do.
When Am I Required to Have a Written Contract?
There are certain circumstances where you have to have a written contract. If the value of the agreement is more than $500, you have to have a written contract. If the agreement involves buying or selling land, it must be in a written contract. If the services provided will take more than one year to finish, a written contract is your only option.
What are the Most Common Issues with Verbal Contracts?
The biggest and most common issue with a verbal contract is that there is no evidence that you made an agreement. Without a witness or some form of written notes, there is no proof that you can use in court. This is why using verbal contracts is not advisable in construction projects. With the amounts of money being exchanged in projects, finding yourself in a position where you need to take legal action without evidence will ensure that you will struggle to enforce an agreement.
Another common problem with verbal agreements is that you almost always have to take legal action to enforce them. If someone is not willing to abide by a verbal agreement, they are aware of the fact that it is difficult to enforce one. This means that they are more likely to violate the agreement, and your only option is to take them to court. There is not a good chance that you will win your case without some form of evidence.
Verbal agreements may seem easier than formal contract agreements, but they also come with a lot of risks. Protect yourself by getting everything in writing. If you have questions about contracts, contact a Portland construction lawyer from Cotney Attorneys & Consultants.
If you would like to speak with one of our Portland construction lawyers, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.