The term contract is commonly and vastly used, notably in the business environment, as an agreement that facilitates activities such as tenancy, employment, and purchases. Typically, contracts can either be oral or written, depending on the contract’s nature and the parties involved. For example, a simple agreement to trade old clothes for a laundry basket may not require written details; therefore, the parties involved can settle the trade through an oral contract. Conversely, complex activities such as an agreement to purchase several hospital equipment from a supplier involve multiple details that must be captured in a written contract. Oral contracts can be as valid as a written contract; however, the former’s enforceability may vary depending on the existing laws. Therefore, this research paper will explore the concept of oral and implied contracts in the United States and examine whether the former is ever enforceable.
Concept of Oral Contracts in the United States
Fundamentally, there lacks a standard definition of an oral contract; however, this research will adopt a legal information institute’s description. The institute defines an oral contract as an agreement that is verbally created or modified without being recorded in writing (“Oral contract”, n.d.). Oral or parole contracts are non-written agreements that promote voluntary exchanges among parties involved in a transaction. Like written contracts, verbal contracts are legally binding, and the people involved are expected to fulfill their end of the contract. For example, if an individual offers another a job in exchange for specific pay, and the latter accepts it, they are legally bound to perform their duties as stipulated in the oral contract. This contract is legally binding because it satisfies the essential elements of a contract: offer, acceptance, consideration, and legal relationship. Most notably, the first party makes the offer, the other party accepts it, forms a legal relationship, and money becomes the primary consideration. In essence, the general rule accepts the unwritten contracts as legally binding to the involved parties.
Enforceability of Oral Contracts
As the literature suggests, oral contracts are enforceable, meaning that the court can impose the offers and require the assenting parties to fulfill their obligations. Blum (2007) supports this view by stating that as a general rule, a contract does not have to be in writing to be a binding and enforceable legal obligation. This statement implies that despite oral contracts lacking tangible proof, the court can enforce them once the assenting parties reach an agreement.
However, as observed by scholars, there are limitations to the enforceability of oral contracts in the United States. Most notably, this limitation is imposed by the Statutes of Frauds, a fundamental doctrine in American contract law (Camero, 2013). The literature suggests that the Statute of Fraud’s primary purpose is to prevent fraud and other injuries that may arise from a contract (“Statute of frauds”, n.d.). (Blum, 2007; Camero, 2013) posit that under the Statute of Frauds, some types of contracts must be memorialized and recorded in a signed writing to be enforceable. Therefore, courts may not enforce contracts that fall within the Statutes of Fraud categories’ if they lack a written agreement.
In essence, each state in the country has varying contracts that qualify for the provisions of the Statutes of Frauds. However, as noted by Camero (2013), five contract types fall within this Statute, including contracts for an executor or administrator, suretyship, marriage, the sale of land, and where performance extends beyond one year from the date of contract formation. The implication of this is that parties intending to form contracts that fall within the five categories must memorialize the agreement in signed writing for it to be enforceable by the law. The author also states that Article 2 of the Uniform Commercial Code (UCC) requires the sale of moveable goods over particular dollar amounts to be signed in writing (Camero, 2013). These goods include merchants such as food, electronics, and paintings, except assets such as money and other securities. This information answers the critical question about the enforceability of oral contracts. Fundamentally, it reveals that despite lacking proof, verbal agreements are binding and enforceable. However, these contracts are not exclusively enforceable; those that fall within the scope of the Statutes of Fraud and UCC must be memorialized and signed in writing.
Implied Contracts
Implied contracts are another category of agreements that may be valid under the English common law. However, these types of contracts are distinct because they are neither written nor created verbally. According to scholars, this type of contract constitutes patterns or customs of reciprocity obligations observable by third parties (Yamashiro, 2015). Put merely, implied contracts are assumed agreements that arise from a tradition or a pattern of behavior observed by the involved parties.
Literature stipulates that implied contracts fall into two major categories; implied-in-fact and implied-in-law. According to Eisenberg (2018), implied-in-fact contracts are true contracts because the parties in question consent to the transaction. The author gives a hypothetical example of Mary Moore, who purchases an apple for lunch at a produce store every day on her way to work. On one occasion, Moore is in a hurry to catch her bus; hence, she picks an apple from a bin outside the store, catches the shopkeeper’s eye, waves the apple at the former, who nods back (Eisenburg, 2018). The author argues that although Moore did not offer to buy the apple, this intention was implied when she waved it to the shopkeeper. Similarly, though the shopkeeper did not verbally acknowledge the purchase, he accepted the offer by nodding his head (Eisenburg, 2018). As exemplified in this case scenario, an implied-in-fact contract is created based on past behaviors and a person’s actions, and plaintiffs can file a remedy for breach in the common law.
The second category of implied offers is implied-in-law contracts, which are also legally binding. Eisenburg (2018) argues that these contracts, which are also known as quasi-contracts, are obligations that are based on unjust enrichment. For example, suppose a family takes their child to the park, and the latter faints, requiring immediate first aid. Fortunately, in his leisure at the park, a doctor leaps to the child’s rescue. In this scenario, the doctor may be entitled to bill the family for the service rendered, and the law may obligate the former to settle the bill. As shown in this scenario, implied-in-law contracts are not necessarily contracts; instead, they are obligations imposed on parties for unjust enrichment.
Conclusion
Findings from this research confirm that oral contracts are enforceable in the United States, so long as they do not fall within the six categories of contracts under the Statutes of Frauds and UCC. Furthermore, the research findings show that implied contracts are also valid contracts whose remedy can be sought under common law. These research findings build on the knowledge that besides oral and written contracts, parties can also assume offers and acceptances through a person’s actions and behavior patterns.
References
“Oral contract” (n.d.). Legal Information Institute. https://www.law.cornell.edu/wex/oral_contract
“Statute of frauds” (n.d.). Legal Information Institute. https://www.law.cornell.edu/wex/statute_of_frauds
Blum, B.A. (2007). Contracts: Examples and explanations. Aspen Publishers Online. ISBN: 0735562415, 97807355622417.
Camero, J. (2013). Zombieland: Seeking refuge from the statute of frauds in contracts for the sale of services or goods. UMKC Law Review, 82(1), 1-28. https://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?vid=0&sid=57856232-fdec-4475-a508-f21b9987414c%40pdc-v-sessmgr01
Eisenberg, M.A. (2018). Implied-in-law and implied-in-fact contracts. In Foundational Principles of Contract Law. Oxford University Press. https://oxford.universitypressscholarship.com/view/10.1093/oso/9780199731404.001.0001/oso-9780199731404-chapter-35
Yamashiro, Y. (2015). Implied contract: Birth and rebirth. Annals of Business Administrative Science, 14(2015), 309-321. http://doi.org/10.7880/abas.14.309
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
