When a Verbal Agreement Isn’t Enough: How to Secure Your Interests Legally

Mar 12

It’s not uncommon for business transactions or personal arrangements to begin with a friendly handshake or a verbal promise. While these informal deals can be convenient, they often leave all parties vulnerable to misunderstandings or legal disputes down the line. In this post, we’ll explore the risks of relying solely on verbal agreements and explain how you can protect yourself and your business through proper legal documentation.

1. Understanding the Legal Status of Verbal Agreements

Are They Enforceable?
Yes…..and no. Under North Carolina law, certain verbal agreements can be binding. For instance, in the case of Kornegay v. Aspen Asset Group, LLC, 204 N.C. App. 213, the court held that "where the evidence is sufficient to support plaintiff's contention that a definite oral agreement was made by the parties, the contract is complete even though the parties contemplated that they would ultimately reduce the agreement to writing". However, if it appears that the parties are merely negotiating and intend for the writing to be the contract, then no contract exists until the writing is executed.

However, proving the terms and validity of a purely oral contract can be challenging if a dispute arises. Key details may be forgotten or misremembered, making it difficult to enforce your rights in court.

Why This Matters:

Limited Evidence: Without written documentation, you’re reliant on witness testimony or circumstantial evidence.
Risk of Misinterpretation: People often have different memories or interpretations of the same verbal discussion.

2. The Statute of Frauds: When Writing Is Required

What It Is:
The Statute of Frauds is a legal doctrine that requires certain types of agreements to be in writing to be enforceable. In North Carolina, contracts involving significant matters, like the sale of real estate, long-term leases, or agreements that cannot be performed within one year, generally must be documented in writing.

Common Agreements That Must Be in Writing:

Real Estate Transactions (sales or leases over a year)
Marriage-Related Contracts (prenuptial agreements)
Contracts That Last More Than One Year
Sales of Goods Over a Certain Value (as governed by the UCC)

3. Protecting Your Business Interests with Written Contracts

Why They Matter:
A well-drafted contract does more than just document an agreement—it also provides clarity on roles, responsibilities, timelines, and remedies if something goes wrong.

Key Elements of a Strong Written Contract:

Clear Terms: Outline payment amounts, deadlines, and deliverables in unambiguous language.
Dispute Resolution Clause: Specify whether you’ll use mediation, arbitration, or litigation if disagreements arise.
Termination Provisions: Define how and when either party can end the contract and what happens in that event.

4. How to Make Verbal Agreements More Secure

If you find yourself in a situation where a verbal agreement is unavoidable or a step toward a written contract, consider these steps to reduce risk:

Follow Up with an Email or Letter: Summarize the agreed-upon terms in writing. This won’t always be legally binding, but it can serve as valuable evidence if a dispute arises.
Record Notes Immediately: Document the date, time, and the core details of the conversation.
Seek Legal Guidance ASAP: If the arrangement involves significant money or long-term obligations, consult an attorney to draft a formal contract.

5. Common Pitfalls of Verbal Agreements

Memory Gaps: Even the most well-intentioned parties can have different recollections over time.
Lack of Specifics: Without explicit details, there’s plenty of room for disagreements over scope, timelines, or payments.
Difficult Enforcement: Courts prioritize written contracts, and you may bear a heavier burden of proof if your agreement isn’t documented.

Conclusion: Putting It in Writing Pays Off

While a handshake or quick verbal agreement might seem sufficient in the moment, the potential risks often outweigh the convenience. Written contracts offer clarity, legal enforceability, and peace of mind—especially for significant business or personal transactions in North Carolina.

Need help drafting or reviewing a contract? Isaboke Law Firm is here to assist. Our team provides customized legal advice to ensure your interests are protected, whether you’re a Charlotte-based entrepreneur or an individual seeking a solid agreement. Contact us today to discuss your options for safeguarding your deals.

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Tori Hampton