Does a Breach of Contract Claim Require a Written Contract?
Think a contract needs to be in writing to be enforceable? Think again: Under California law, courts generally uphold oral contracts, which can create unique challenges to the parties who are bound by them when a dispute arises.
What exactly makes up an oral contract and how should parties to one protect themselves? A recent case from California’s Second District Court of Appeal offers some insight.
Last year, in the case of Avetisyan v. Drinker Biddle & Reath LLP, the court allowed an attorney who was fired from her law firm in 2014 to proceed with her lawsuit against her former employer.
She alleged that her firing breached a promise from firm leadership that it would continue to employ her so long as her work was equal to that of an “average” associate. On appeal, the law firm argued that the promise was too vague and indefinite to enforce, but the appeals court disagreed.
While the court conceded that “average” was a little vague, it concluded that the attorney brought forward enough facts for it to understand the parties’ intentions surrounding the contract and what “average” meant to the parties.
Contract Basics
Every contract — whether oral or written — needs the same basic elements to be enforceable. These elements are a meeting of the minds, offer, acceptance, and consideration.
A meeting of the minds is a showing that parties entering the contract are doing so with mutual agreement.
This mutual agreement is shown through the next two elements: offer and acceptance. These are straightforward: a party makes an offer to another individual to enter into an agreement, and the other individual can choose to accept the offer, make a counteroffer, or decline the offer.
Should the parties come to an agreement on the offer and acceptance, the last requirement is consideration, or an exchange of something of value for a party’s action or nonaction. Frequently, money is consideration, but consideration doesn’t always have to be money.
Watch Your Words
The court’s ruling in the above case offers two key takeaways for those with oral contracts or may enter them.
First, plaintiffs asserting a breach of an oral contract claim need to bring forward enough facts for a court to determine the parties’ intent to enter into a contract and that there was a common understanding of the terms of the agreement. In making her case, for example, the attorney pointed to the firm’s process of evaluating associates to show that the firm had some means of knowing what an “average” associate’s work looked like.
Second, words matter. Before making oral promises to another person, one should consider that they might be enforceable in court. In the employment context, this is especially important. Managers should keep in mind that their words have weight — and indeed may also be legally binding.
In the world of contracts it is important to stay abreast of evolving case law. When it comes to contract disputes, having an experienced attorney to provide legal advice can help you understand your rights.
If you are experiencing a contract dispute, contact the skilled attorneys at Berman North. We specialize in contract and business law matters, as well as employment disputes. Through our personalized, client-focused representation, we will help find the best solution for you.