Verbal Contract Case Example
When it comes to business dealings, contracts are essential. But what happens when a verbal contract is made? Is it legally binding?
Let`s take a look at a real-life verbal contract case example.
In 2012, a businessman named Rabinowitz made an oral agreement with a New York developer named Tessler. The agreement was for Rabinowitz to sell a piece of land to Tessler for $4 million. However, the agreement was never put in writing.
Tessler paid $1 million as a down payment, but Rabinowitz then refused to sell the land. Tessler took the case to court, arguing that there was a verbal contract in place and that Rabinowitz needed to honor it.
The court agreed with Tessler, stating that the verbal agreement was legally binding. Rabinowitz was ordered to complete the sale of the land and pay Tessler`s legal fees.
This case highlights the importance of taking contracts seriously, even if they are only verbal. Verbal contracts can be just as legally binding as written contracts, assuming certain conditions are met.
First, there needs to be a clear offer and acceptance. In the Rabinowitz case, Tessler offered to purchase the land for $4 million, and Rabinowitz accepted the offer. Both parties understood and agreed on the terms of the deal.
Second, there needs to be consideration. Consideration is something of value that is exchanged between the parties, such as money or services. In the Rabinowitz case, Tessler paid a $1 million down payment, which was the consideration for the purchase of the land.
Third, the contract needs to be enforceable. In other words, the terms of the contract need to be legal and not violate any laws or public policies.
To avoid potential legal issues, it is always best to put contracts in writing. This ensures that both parties understand the terms of the agreement and can refer to it in the future. However, if a verbal contract is made, it is important to take it seriously and treat it as if it were written.
In conclusion, the Rabinowitz case is an example of how verbal contracts can be legally binding. If you make a verbal agreement, make sure that there is a clear offer and acceptance, consideration, and that the terms of the agreement are enforceable. However, the best practice is to always put contracts in writing to avoid any legal battles.