Contracts are legally binding agreements between individuals or entities like businesses. When parties enter into a contract, they agree to fulfill certain obligations or terms, and the formation of this agreement begins relatively simply – with an offer and acceptance.
While the current popular method of entering into a contract typically involves a written, signed agreement, there was a time when a person’s word was their bond. Oral contracts have a long history, but do a promise and a handshake still create a binding contract in Florida? It depends. Under Florida law, both an oral contract and a written contract are considered equally binding and enforceable, but there are some relevant differences and exceptions to be aware of.
The Difference Between Oral Contracts and Written Contracts
Aside from the obvious difference between a spoken agreement and a physical recording in text format, there are numerous differences between oral and written contracts in Florida. One of the most impactful elements, and an area of significant disparity in the effectiveness of these two types of contracts, is enforcement.
When an agreement between two or more parties is only made verbally and not in writing, the terms and conditions are subject to interpretation, perception, and memory. This can make enforcing oral contracts difficult, and it can easily open the door to future disputes and even litigation.
Written contracts are considered the best practice to ensure every party to the agreement understands their obligations and rights and everyone is on the same page regarding the terms. However, in select situations, contracts must be in writing to be valid.
When Are Written Contracts Required in Florida?
Oral contracts are legally enforceable in Florida, but this is only a general rule and does not encompass every type of agreement as a universality. There are a variety of contracts that must be in writing to be valid, for example:
- Promise to pay someone else’s debt
- Prenuptial agreements
- Real estate contracts
- Contracts that cannot be performed within one year
Written contracts come in many different forms. While most people think of thick stacks of paper with multiple places to sign and initial when they hear the word contract, these written agreements can also be simple enough to fit on the back of a postcard. In many businesses, the company order form is a written contract. Sometimes, the terms of a contract are spelled out in several emails.
Even though Florida does not require a certain format for a written contract to be valid, there are elements that must be present. The below requirements exist for both written and oral contracts:
- Offer – one party makes a proposal and communicates the terms of the contract to the other party
- Acceptance – the party presented with the offer accepts the terms of the contract
- Consideration – something of value is exchanged between the parties, such as money, goods, and services
- Mutual Assent – both parties have a mutual understanding of the conditions of the contract and intend to be bound by the terms
- Capacity – a party must have the mental, legal, or even corporate capacity to enter into a contract.
There are also several recommended practices when creating and entering into a written contract that tend to help avoid disputes and protect the interests of the parties, including:
- Signatures from authorized representatives of both sides of the contract
- Detailed clauses that spell out each side’s responsibilities
- Clause stating the document is the entire contract and that all amendments must be in writing and signed by both sides
- A clause that states what the damages are if there is a breach of contract
The purpose of a written contract is to help business run smoothly. The best contracts make the terms of the deal clear, delineate each party’s responsibilities, and accurately reflect each side’s understanding of the transaction. Simple deals like a standard order from a vendor may only require a simple contract, while more complex transactions require longer written contracts to cover all the details fully.
Enforcing Oral Contracts in Florida
How can a contract lawyer prove what the terms of the deal were when there is no document to refer to? This makes it challenging, but not impossible, to enforce an oral contract. There are three key pieces of evidence that can be used to both prove the existence of the contract: as-well-as its specific terms and conditions.
Witness Testimony
Anyone who was present when the deal was agreed upon would be able to give an account of the terms of the contract. Keep in mind, however, that witness statements can be contradictory and make it difficult for a neutral factfinder to make sense of what happened when the contract was entered into.
Written Communication
If you or the other parties discussed the agreement or specific terms in writing, like through text messages or emails, these written communications that reference the contract may be used to prove that the oral contract exists.
Partial Performance
Partial performance may be helpful in establishing the existence of a contract if you or the other parties have already completed or begun to perform the obligations that were agreed upon.
Amending Written Contracts by Later Oral Agreement
It is not uncommon for businesses and other parties to have a written contract and then experience changes that necessitate amendments to the contract. If the existing written contract does not forbid making oral amendments, there is nothing to stop the parties from doing this. It is often more convenient in the moment than formalizing a written amendment.
However, by not putting the agreed-upon changes in writing, you risk potential arguments, disputes, and misunderstandings. Amending a written contract with an oral amendment puts you essentially in the same position as if no written contract ever existed. Having witnesses present for discussions about the amendments can be helpful, but it is not a guaranteed way to avoid confusion and disagreement.
Final Thoughts
Florida law considers oral contracts and written contracts legally binding if they meet all the criteria for a valid contract. Even when oral agreements are permitted, having the terms and conditions in writing and signed by the parties is recommended to prevent confusion and reduce the risk of future contract disputes.
