Can You Enter a Binding Agreement Without Putting It in Writing?
Under the laws of New Jersey, there are five requirements for a binding and enforceable contract:
- An agreement by at least two parties—In legal terms, there must be an offer and an acceptance of that offer.
- Consideration—This legal term means that each party to the agreement must either give something of value or promise to refrain from doing something they have a legal right to do.
- Contractual capacity—All parties must have the ability to understand that they are entering into a legal contract and their obligations under the agreement.
- Willingness of all parties to enter the contract—There must be no evidence of fraud, misrepresentation, duress, or undue influence upon any party.
- Legal subject matter—The subject matter of the contract must not be illegal.
It’s important to note that, among the five elements of an enforceable contract, there’s nothing requiring the agreement to be in writing. Does that mean that oral contracts are always valid?
The Statute of Frauds
In New Jersey, as in other states, there’s a statute (a written law enacted by a legislative body) that identifies when a contract must be in writing. Under the New Jersey statute of frauds, the following types of business agreements must be documented in writing or else they are not enforceable:
- A contract for the sale of goods with a value in excess of $500
- A contract involving an interest in land or real estate
- A contract that cannot be fully performed within one year of the date of execution
- A promise to pay or guarantee the financial obligations of another person
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide comprehensive business formation counsel 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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