Is a Verbal Agreement Binding in New Jersey?
- A verbal agreement must contain certain elements to be legally binding in New Jersey. The agreement must first contain an offer. An offer is a promise by one party to perform a certain action or provide a service for the other party. The offer should identify the terms, prices and/or quantities of the agreement. After one party makes an offer, it is only valid if it is accepted. The other party must agree to the terms of the offer.
- According to New Jersey contract law, consideration – something of value – must be given to solidify a verbal agreement. Consideration can be goods or services, money or anything else of economic value. A verbal agreement is legally binding when the involved parties understand and accept an offer and consent to the consideration. For instance, “I will give you $100 to paint my garage door this afternoon,” is an example of a verbal contract if the other party agrees. Once the money exchanges hands, the receiving party must fulfill the duty of painting the garage door; otherwise, he will be in breach of the verbal contract. If the receiving party paints the garage door first and is not paid, the owner of the garage is in breach of the verbal contract.
- Proving that a verbal contract exists can be challenging. If no one else is around to witness the agreement, proving the various terms of the contract becomes a “my-word-against-yours” matter. A court can only enforce a verbal agreement if the party can prove that all necessary elements of the contract exist. The party must establish the objective of the agreement, the duties and obligations of the other party and the price or consideration of the agreement.
- Some agreements must be in writing to be legally binding. These types of contracts typically involve a certain dollar amount, an extended period of time or complicated objectives. For example, real estate sales agreements must be in writing. Agreements that will extend beyond the life of one or more of the party members must be in writing as well. Also, a verbal promise to pay the debts of another person is not legally binding. Each party must have the legal capacity to enter into an agreement as well. Minors and mentally incompetent individuals, for example, do not have the capacity to establish a legally binding agreement.