Is an Oral Contract Enforceable in California?

Oral Contracts and Verbal Agreements in California - SARI LAW FIRM

“In California, oral contracts are enforceable if they meet legal requirements and don’t fall under the Statute of Frauds.”

You probably hear variations of the same question: “If nothing was written, doesn’t that mean the agreement isn’t enforceable?” This misconception is common. In truth, California law does recognize and enforce oral (verbal) contracts provided they meet the requirements for a valid contract and don’t fall within the categories that the law requires to be in writing. Let’s break this down step by step so you understand when a handshake deal might actually hold up in court and when it won’t.

1. What Is an Oral Contract?

A contract is an agreement between two or more parties to do (or refrain from doing) something. Under California’s Civil Code, contracts can be either express (terms stated in words) or implied (terms manifested by conduct). An oral contract is an express agreement whose terms are spoken rather than written. California law generally allows contracts to be oral unless a statute requires a writing. 

2. Elements of a Valid Contract

Whether a contract is verbal or written, certain elements must be present for it to be legally binding. The elements include:

• Mutual agreement / “meeting of the minds” – both parties must intend to be bound by the same essential terms.

• Offer and acceptance – one party makes a definite offer and the other party clearly accepts it.

• Consideration – each party must exchange something of value.

• Capacity – all parties must understand what they are doing; minors or persons lacking mental capacity cannot enter enforceable contracts.

• Legal purpose – the subject of the contract must not violate the law.

If any of these elements is missing, a court may find that no contract exists. These elements apply equally to oral and written contracts.

3. Oral Contracts Are Generally Enforceable

Civil Code § 1622 states, “All contracts may be oral, except such as are specially required by statute to be in writing”. This provision codifies California’s default rule that oral agreements are binding if they satisfy the elements above. Oral agreements are common in day‑to‑day transactions—for example, when a person agrees verbally to mow a neighbor’s lawn for $100 and performs the work. 

A. There Are Challenges in Proving an Oral Agreement

Although oral contracts are enforceable, proving their existence and terms can be difficult. In a dispute, each party may have a different memory of what was agreed, and there is no written document to consult. Courts evaluate evidence such as:

• Eyewitness testimony from those present during the conversation.

• Actions taken after the agreement (e.g., one party performed services and the other paid).

• Documents and communications referencing the deal, such as text messages, emails, invoices or receipts.

• Industry custom or standard practice showing that verbal agreements are typical in that context.

Because of these evidentiary hurdles, oral agreements frequently become “he said, she said” disputes requiring litigation. This is why attorneys often advise clients to put important agreements in writing even when the law does not require it.

4. The Statute of Frauds – When a Writing Is Mandatory

California’s Statute of Frauds lists agreements that are invalid unless there is a writing signed by the party against whom enforcement is sought. These include:

Type of contract (must be in writing)	Description / statutory basis
Long‑term agreements	Contracts that cannot be performed within one year from their making
Promises to answer	Promises to answer for another person’s debt, default or miscarriage
Real estate transactions	Agreements for the sale of real property or leases longer than one year, including authority to buy or sell real estate
Real estate brokerage or agency	Agreements employing an agent or broker to purchase, sell or lease real estate for longer than one year
Lifetime performance Agreements	Agreements not to be performed during the promisor’s lifetime
Assumption of mortgage debt	Agreements by a purchaser of real property to pay a debt secured by mortgage or deed of trust unless the assumption is specified in the conveyance
High‑value loans	Commitments to loan money or extend credit over $100,000 when the loan is not for personal, family or household purposes

In addition, contracts “made in consideration of marriage” and agreements for the sale of goods over $500 must generally be in writing

A. Sale of Goods Over $500 – California Commercial Code § 2201

For the sale of goods, California has adopted the Uniform Commercial Code (UCC). Section 2201 of the Commercial Code provides that a contract for the sale of goods priced at $500 or more is not enforceable unless there is a signed writing. However, there are exceptions. An unwritten contract may still be enforceable if:

• The goods are specially manufactured for the buyer and unsuitable for others.

• The party being sued admits in court that the contract exists.

• The buyer paid for or received the goods, thereby evidencing the contract.

• Between merchants, a written confirmation is sent and the recipient fails to object within ten days.

These rules mean that a purely oral contract to buy inventory worth $1,000 may be unenforceable unless performance (payment or delivery) or another exception applies. 

B. Additional Agreements Requiring Writing

Also, some California case law and statutes require writings for certain other agreements, such as:

• Agreements made in consideration of marriage (e.g., prenuptial promises).

• Sales of personal property above $5,000 (a condition under the general Statute of Frauds but often superseded by the UCC for goods).

• Certain financial contracts involving commodities, swaps or other qualified financial contracts (specialized exceptions in the Civil Code)

5. Exceptions to the Statute of Frauds

Equitable doctrines may allow enforcement of an oral agreement. Important exceptions include:

• Detrimental reliance / promissory estoppel: If one party relied on the oral promise and suffered a loss, courts may enforce the contract.

• Partial performance: When a party has partially performed, such as starting work or making payments, courts may uphold the agreement.

• Specially manufactured goods: As noted above, goods made specially for the buyer fall outside the writing requirement.

• Admission in pleadings or testimony: If the party being sued admits that the contract exists, the court may enforce it despite the lack of a writing.

• Merchants’ confirmation (UCC): A confirmation sent between merchants may satisfy the writing requirement unless promptly objected to.

• Fraud prevention: When a party’s fraud prevented the contract from being put in writing, the innocent party may enforce the oral agreement.

These exceptions protect parties who reasonably relied on an oral agreement or where fairness demands enforcement.

6. Statute of Limitations – Act Quickly!

Clients must also understand the deadlines for suing on a contract. California’s Code of Civil Procedure gives four years to file a breach‑of‑contract suit for a written agreement (CCP § 337) but only two years for an oral contract (CCP § 339). If suit is not filed within these periods, the claim will be dismissed. 

7. Conclusion

Oral contracts are generally enforceable in California, but only when the basic elements of a contract exist and the agreement does not fall under the Statute of Frauds or other statutes requiring a writing. Although clients often enter deals on a handshake, the absence of a written agreement makes it harder to prove the terms, shortens the time to sue and leaves more room for dispute. Written agreements and careful documentation protect both parties and provide peace of mind.

If you regularly deal with verbal agreements—whether in business, real estate, employment or personal matters—know the risks and exceptions. When in doubt, put it in writing and consult with counsel. By understanding the enforceability of oral contracts and the situations requiring a written agreement, you can make informed decisions, safeguard your rights and avoid costly litigation.

At Sari Law Firm, we help clients protect their rights and hold others accountable when promises aren’t kept. If you believe someone has breached an oral agreement or taken advantage of you, contact us today to schedule a free consultation. Let’s make things right. Sari Law Firm represents clients throughout California, including Los Angeles County, Orange County, San Diego, and the Inland Empire, in breach of contract and debt collection matters.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Every case is different. If you believe your rights have been

violated, consult a qualified California attorney to evaluate your specific situation.

FAQ

1. Are oral contracts legally enforceable in California?Yes. California Civil Code §1622 states that all contracts may be oral unless a specific law requires a written form.

2. What are examples of agreements that must be in writing?Contracts that can’t be performed within one year, real estate transactions, and high-value loans are examples under the Statute of Frauds.

3. How can I prove an oral contract exists?You can use evidence such as text messages, emails, invoices, witness statements, or partial performance (e.g., one side already began work or payment).

4. What is the statute of limitations for suing on an oral contract?Two years under California Code of Civil Procedure §339 — compared to four years for written contracts.

5. Can an oral contract be enforced if one party admits it existed?Yes. Admission in court or pleadings is one of the exceptions to the Statute of Frauds.

6. What should I do if someone broke a verbal agreement?Document all communications and contact a California contract attorney immediately. Sari Law Firm can evaluate your situation and help you take legal action if appropriate.