Can You Sue for a Breach of Verbal Agreement in Maryland?

Contracts are formed every day. The degree of formality obviously differs depending on context, but bargained-for exchanges are part of our everyday life. Ideally, in a business setting, every contract would be in writing. For the sake of convenience or otherwise, putting an agreement in writing does not always occur. If you were party to an oral agreement that was breached, you could be entitled to damages for your financial loss. Contact the Baltimore breach of contract attorneys at the Heyman Law Firm and find out what your best options are for receiving the just compensation you deserve.

Oral Contracts in Maryland

All contracts have four essential elements, regardless if they are oral or written. These elements are necessary in order for parties to be bound by the terms of the contract:

1. Offer
2. Acceptance
3. Consideration
4. Mutual Assent

An offer is a promise to act or refrain from acting. Acceptance is the unequivocal agreement to the terms of an offer. Once a party has accepted the terms of an offer, a contract is formed. Consideration is the value that induces each party to enter into the contract. In order for a contract to be legally binding, the parties must have had the requisite intent, i.e. mutual assent, to enter into the contract at the time of formation. If the contract is a verbal agreement, the parties must agree upon what would be considered a breach. They must also provide the terms of restitution in the event of a breach.

Statute of Frauds

The Statute of Frauds is a requirement that certain types of contracts must be memorialized in writing in order to be legally enforceable. Without the evidence of a contract, parties cannot be held liable for a breach. Maryland law holds that the following types of contracts are not enforceable unless they are in writing:

• Sale of goods worth over $500
• Promises made in consideration of marriage
• Sale for interest in land
• Leases for land that last more than one year
• Service contracts that cannot be performed within one year
• Contracts where the executor of an estate promises to pay off the estate’s debts with his or her own funds
• Suretyship contracts (one person takes on the debt of another)

Verbal agreements are difficult to prove without testimony from impartial witnesses. Nevertheless there are exceptions to this rule:

1. Specific performance – This is generally mostly applicable for contracts that involve the sale of an interest in land. The party seeking enforcement must establish that he or she reasonably relied on the terms of the contract and justice can only be carried out through specific performance.
2. Full performance – Once one of the parties fully performs the terms of the contract, the Statute of Frauds does not apply.
3. Partial performance – In an installment contract for sale of goods, the non-breaching party must show acceptance at every installment. There could also be partial payment.
4. Promissory Estoppel – If a party to a contract has changed his or her position substantially (by action or forbearance) in reliance on the contract, the contract may be enforced.
5. Specially manufactured goods – Goods were made for the buyer and are not suitable for the ordinary course of business.
6. Merchant exception – Contracts between merchants under the UCC only have to be signed by one party. A confirmation letter is sent to the party who the first party is seeking enforcement from. The party receiving the letter has 10 days to object in writing.

Lawsuits for Breach of Verbal Agreements

Maryland has a three-year statute of limitations for contract claims. This means that a person who wants to file a breach of contract cause of action has three years from the date of the events giving rise to the claim.

There are three types of monetary damages that are available to non-breaching parties:

• Damages
• Nominal
• Liquidated

Damages are divided into four subsets: compensatory, punitive, nominal, and liquidated. Compensatory damages put the non-breaching party in the position he or she would have been in if the breach never took place. Punitive damages are awarded to punish the defendant for intentional or malicious behavior. Nominal damages are token damages (example: $1) when the non-breaching party did not suffer monetary loss. Some contracts contain liquidated damages clauses that provide the amount of damages that should be awarded to the non-breaching party in the event of a breach. These clauses are often included when damages would be difficult to calculate. Other contracts provide for an award of attorneys’ fees and costs in the event of a successful claim concerning a breach.

Equitable remedies include cancellation of the contract and restitution. Cancellation voids the contract. Restitution puts the non-breaching party in the position he or she was in prior to the breach.

Baltimore Breach of Verbal Contract Attorney

If you are party to a contract that has been breached, you may be entitled to damages. Contact a Maryland business advisory attorney who can give you an honest assessment of your claim and the compensation that might be available to you. To schedule a confidential consultation with a breach of contract attorney at the Heyman Law Firm, call (410) 305-9287 today.