Verbal contracts and detrimental reliance

Verbal contracts and detrimental reliance

On Behalf of | Jan 10, 2019 | Uncategorized |

When Louisianans think of contracts, they often envision written agreements that are aggressively negotiated to obtain the best terms. In theory, this is correct, but there are certain circumstances where a contract can be created without a written agreement. This often occurs when verbal promises are made. Yet, determining where the line between a promise and a legally enforceable contract lies can be tricky, which is why these matters are often resolved through legal action.

So, when will a promise be considered a legally enforceable contract? In short, anytime an offer is made and an individual relies on that offer to his or her detriment, a contract will be considered to have been created. Therefore, to avoid language that would create a contract, an individual should be careful to avoid couching discussions in terms of offers. For example, indicating that goods could be sold to another party for a certain amount may be construed as an offer that is later accepted when the party cancels another purchase contract to take advantage of the offer.

There are limitations posed on these verbal contracts, though. In order for a contract to be considered created, the detrimental reliance must be foreseeable and reasonable. Therefore, a party cannot claim that an outrageous offer was legitimately relied upon. For example, a joking discussion about selling a $1 million home for $200 likely will not be enforced, even if the individual seeking to buy the home relied on that offer to his or her detriment.

Verbal contracts and detrimental reliance forms the basis of a number of contract disputes. These matters can be hotly contested, and there can be a lot on the line. This is why it is important for those dealing with these matters to protect themselves as fully as is possible under the circumstances by seeking assistance from a qualified legal professional.