In today's Freedom Friday blog and email newsletter, I want to talk about a question I get asked about somewhat often, and that's can I enforce an oral contract?  Everyone knows they can enforce a contract or agreement in writing, and that's why the old adage is true, “Get it in writing!”  But can I enforce an oral contract?  That's the question I'm answering in today's Freedom Friday blog and email newsletter.

The answer to the question is maybe, you might be able to enforce an oral contract.  There is an area of law in contract law called the “statute of frauds.”  Oklahoma has two different “statute of frauds.”  One concerns the sale of goods.  The other concerns all other contracts.  In short, the “statute of frauds” requires that certain types of contracts be in writing and signed by the person to be charged.  The “statute of frauds” is a defense to claims from parties who want to be paid for their performance on an unwritten contract.  If you want to enforce an oral contract, it can't be a contract covered under the “statute of frauds” in Oklahoma.

So, what is the “statute of frauds” in Oklahoma?  Well, there are two different statutes.  The first “statute of fraud” in Oklahoma concerns the sale of goods.  A contract for the sale of goods for $500 or more is not enforceable unless it is in writing and signed by the person against whom enforcement is sought, or by his authorized agent or broker.  A contract is not insufficient because it omits or incorrectly states the terms of the contract, but the contract is not enforceable beyond the quantity of goods listed in the contract.  There are two different exceptions to this rule.  The first exception is for merchants.  If the contract is between merchants, then if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the “statute of frauds” against such a party unless written notice of objection to its contents is given within ten (10) days.  So, that's the first exception --- the contract still has to be in writing, but maybe not signed if it is between merchants and its confirmed.

The other exception to the “statute of frauds” in Oklahoma for a sale of goods of $500 or more has three different parts.  First, there is an exception if the goods are to be specially manufactured.  If the goods are to be specially manufactured and are not suitable for sale to others in the ordinary course of business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement.  Second, there is an exception if the party against whom enforcement is sought admits that a contract for sale was made, but the contract is not enforceable beyond the quantity of goods admitted.  Third, there is an exception if payment has been made and accepted for the goods, or if the goods were received and accepted.

So, what about if the contract is for something other than a sale of goods for $500 or more?  That's the other “statute of frauds” in Oklahoma.  Under the other “statute of frauds” a contract is invalid unless it is in writing and subscribed by the person to be charged.  These contracts include an agreement, by its terms, that cannot be performed in one year; a special promise to answer for the debt, default or miscarriage of another, except a personal guaranty; an agreement made upon consideration of marriage, other than a mutual promise to marry (i.e. pre-nuptial agreements must be in writing); and an agreement for the leasing for a period of longer than one (1) year, or for the sale of real property, or an interest therein.

So, can you enforce an oral contract?  Yes you can, unless it falls within the many contracts described in Oklahoma's statute of frauds.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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