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Can a verbal offer constitute an enforceable contract?

One of the most common documents used in business dealings are business contracts. These are important documents that spell out a lot of details. Unfortunately, a lot of business litigation centers on contract disputes. Breach of contract claims are quite common, but the frequency with which these matters are alleged doesn't reduce their significance. A breached contract can cause harm to all parties involved.

On the one hand, a party may not receive the materials, compensation, or service that it bargained for. The other party may suffer financial loss, harm to its reputation and damage a business relationship when it fails to live up to its end of an agreement.

Although some breaches of contract are quite obvious, in other instances it is more challenging to determine if a breach of contract has occurred. One reason for this is because the formation of a contract itself can be a gray area that is subject to interpretation. While best practice is to reduce agreements into written contracts, sometimes promises are verbally made. Does this amount to an enforceable contract?

It depends on the circumstances. Generally speaking, a court will find a verbal promise enforceable as a legally binding contract if it made an offer to another party and that second party relies on that promise or offer to its financial detriment. This detrimental reliance is key to these claims. So, if a business receives a verbal offer for a supply of goods and then misses out on the sale of those goods because the promising party failed to deliver those goods, then detrimental reliance has likely occurred. This is especially true if another supplier could have been found at the time but its costs have now risen.

Breach of contract claims can encompass a wide variety of legal issues. Those who are ill-equipped to approach these issues may find themselves on the losing end of a legal battle. This can be costly in many ways. Therefore, those dealing with a breach of contract claim probably shouldn't try to approach the matter on their own, and should instead consider seeking help from an attorney who can help them protect their best interests.

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