Do Handshake Contracts Hold Up in Court?

In a perfect world, contracts wouldn’t be necessary. People would be able to chat and work together to make arrangements that work for everyone. Unfortunately, our world contains too much conflict for this to work out. That’s why California has set up specific contract laws to clarify what’s considered a contract and when agreements are enforced in court.

These laws include specific rules regarding handshake contracts to account for people who try to make deals without writing things down. Here’s what you need to know about handshake contracts, whether they hold up in court, and what to do if you’ve suffered from a broken oral agreement.

What Is a Handshake Contract?

“Handshake” contracts are another name for oral contracts. These arrangements are formed when two people verbally agree to an exchange or other arrangement. They get their name from the handshakes that many people use as a sign that they’ve sealed a deal. They’re considered legally binding, but they aren’t always easy to enforce.

Oral Contracts Under California Law

California recognizes oral contracts as a form of binding agreement equivalent to any other contract. The state defines a contract as an agreement between two parties that can be proven in a court of law. The big difference between the two types is that oral ones must be confirmed by verbal testimony in court.

Some agreements must be in writing and cannot be made verbally, including:

  • Any that won’t happen for a year, that will last for longer than a year, or that will take place after one party dies
  • Any connected to real estate sales
  • Loans of more than $100,000 for anything other than personal use
  • Promises to pay someone else’s debts

Outside of these issues, any arrangement can be made verbally or in written form.

What to Do About a Broken Oral Contract

There’s a reason most people recommend that you get things in writing. It’s significantly harder to prove that a verbal agreement took place and what terms it included.

There are three crucial elements you’ll need to prove for a court to agree that an oral agreement exists:

  • Meeting of the minds: Both parties must have understood that they were entering into an agreement.
  • Offer and acceptance: One party must have offered something, and the other party must have accepted it.
  • Consideration: Something must be exchanged in the arrangement, such as labor, goods, or services.

You’ve entered a handshake contract if you’ve made a verbal agreement that included these three elements. You’ll need to prove that it exists in court through oral testimony, and the other party’s testimony will also be taken into account. That can make it difficult for courts to determine which of you is telling the most accurate story. Once you’ve proven that the contract existed, though, it will be enforced just like any other

Get Legal Help to Enforce Verbal Contracts

If you’ve entered a verbal agreement and the other party has violated its terms, you need legal help. The expert team at AM+F LLP will help you build your case and hold the other party accountable for their actions. Get in touch today to schedule your consultation and fight to ensure your handshake contract is enforced.