Can You Enforce an Oral Business Contract?

Are There Agreements that May Only Be Enforced in New Jersey if in Writing?

If you are like most small business owners, much of your day is spent on the phone or in meetings. In those conversations, you’ll often come to agreement on terms of a proposed contract. Suppose your discussions meet all the requirements of a valid and enforceable contract:

• There’s an offer and acceptance
• Both parties have agreed to give something of value (consideration)
• The subject matter of the agreement is legal
• Both parties have the requisite contractual capacity (no one is mentally impaired, intoxicated or under age)
• Both parties are willingly agreeing to the terms (there’s no misrepresentation, duress or coercion)

Does the contract need to be put in writing to become enforceable? As a general rule, no.

The New Jersey Statute of Frauds

In the state of New Jersey, as in all other states, there’s a written law, known as the statute of frauds, which requires that certain types of contracts be memorialized in a written document to be valid. Those contracts include:

• Contracts for an extension of credit, grant or loan exceeding $100,000, if made by an entity in the business of lending
• An agreement by a creditor not to exercise a contractual right when the amount in controversy is greater than $100,000
• Agreements involving an interest in land or real estate, including leases with terms in excess of three years
• Real estate broker commission contracts
• Suretyship or guarantee agreements, where one person agrees to accept financial responsibility for the obligations or debts of another
• Prenuptial agreements
• Contracts for the sale of goods in excess of $500

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide comprehensive legal counsel to businesses and business owners throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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