Is a verbal construction contract legally binding?

There’s a lot at stake in a construction contract. Clearly defined terms of these agreements can dictate the obligations of all parties involved, which can have a profound impact on costs and timeliness. As we’ve discussed previously on the blog, change orders can also complicate matters, leading to even more expense and time. This means that oftentimes construction contracts are dense, containing a whole host of provisions meant to protect the parties involved.

Because these contracts can be intricate so as to avoid disputes and litigation further down the road, some contractors and subcontractors simply rely on word-of-mouth agreements to simplify matters. There’s something to be said for those who stick to their word, but verbal promises that are made in the construction context sometimes aren’t lived up to, which can cause numerous issues. The question, then, becomes whether one of these verbal agreements is legally binding.

Is a verbal promise legally enforceable?

The answer to this question really depends on the facts at hand. In some instances, a court will find a verbal promise enforceable, while in others it won’t. To reach a determination as to whether a verbal agreement constitutes a binding contract, a court will look at a number of factors. Amongst them are:

  • The history of dealings between the parties
  • The realistic expectations of the offer and acceptance
  • Whether an actual offer was made and accepted
  • Whether detrimental reliance occurred

Each of these factors is important. An offer that couldn’t possibly be realistic in nature, such as agreeing to replumb a home for $100, probably won’t be held enforceable. However, if the offer seemed legitimate, the parties have a history of entering into contractual relationships on a verbal basis, and one party suffered harm due to reliance on the terms of the verbal agreement, then a court is much more likely to find that the agreement is enforceable.

What can you do to protect yourself?

The best way to protect yourself from litigation over a verbal agreement is to simply avoid verbal arrangements. It might seem costly and time-consuming to create a contract, but the process may be easier than you think. And it can give you a wide umbrella of protection, ensuring that you’re paid and that disputes over the quality of your work are carefully controlled.

If, for whatever reason, you feel like you’ve been wronged by a verbal promise or you recently entered into a verbal agreement but are now worried about it, be sure to document everything. Write down the date, time, and context of the verbal agreement, making sure to identify witnesses to the agreement. Also be sure to notate any business opportunities that were missed on account of the verbal arrangement. Then, familiarize yourself with the law and how it might apply to your case. Even looking at similar cases and how they have played out could be important to your situation moving forward. After all, this information could be key to a legal dispute, should one arise in the future.

Know how to navigate your complex construction law issues

We know that you just want to perform your work and make a living doing so. That’s not a big thing to ask. But your ability to successfully do so can be complicated by the nuances of construction law. That’s why it’s important that you know the law and how it applies to your set of circumstances. Only then can you fully protect your interests and position yourself for the success that you deserve.