As a business owner, you value trust in transactions with your clients, third-party vendors and partners. Making agreements with them is essential for the success of your business. However, how you execute these deals is critical.
In North Dakota, all contracts may be oral except those mentioned in the Statute of Frauds. While legally valid, proving the precise terms of an oral contract in court can be difficult and lead to uncertain outcomes. Understanding where the law draws the line in contracts is crucial to protecting your business.
The enforceability of an oral contract
The courts can treat oral contracts as valid and enforceable, provided that they meet the requirements of a contract. Crucially, your oral agreement must not fall under the state’s Statute of Frauds.
The crucial factors to consider
The Statute of Frauds prevents complex issues stemming from oral agreements. This doctrine dictates that certain agreements are invalid if they are not in writing and do not have the signatures of the involved parties. These include, but are not limited to, real property transactions, debt promises and large loans.
If your oral agreement falls under this rule, the court may deem it invalid and unenforceable. As a result, you can lose your claim.
The best protection is preparation
Protecting your business starts with proactive preparation. Every agreement with your supplier, vendor or partner needs to be in clear writing and signed by the involved parties. Ultimately, this signed document follows state rules on contract validity and enforceability. So, in case a dispute arises, it acts as your ultimate evidence.
If you are already in a dispute over an unwritten deal, an experienced attorney can offer guidance in protecting your business.