Oral Contract or Agreement to Agree?
Oral Contract or Agreement to Agree?
Generally, a contract need not be written to be valid and enforceable under California law unless the subject matter of the contract is subject to California’s statute of frauds. However, where the parties intend that an agreement be reduced to writing, a written agreement is necessary.
Contract Formation and Mutual Assent
Creating a contract requires that four elements be met: (1) mutual assent, (2) the capacity to contract, (3) a lawful object of the contract, and (4) consideration. Mutual assent means that the parties come to an agreement on all material terms of the contract. A material term is one that concerns significant issues such as the subject matter of the contract, the price, terms of payment, etc.
Written Agreement as a Material Term
“Agreements to agree” are not binding in California. Nor are preliminary negotiations the same as a valid agreement. Therefore, where the parties intend to put their agreement into a signed writing, no contract is formed until that later written agreement is executed. Failure to sign a subsequent written agreement means that no contract existed.
Whether the parties have created a binding oral contract, or merely an agreement to agree at a later date depends on the surrounding facts and circumstances of the particular case. Key evidence in these situations includes the actions taken by the parties.
Getting Legal Help
Brown & Charbonneau, LLP represents individuals as well as large and small companies in cases involving all forms of business disputes. If you are involved in a business dispute, or would like to learn about your rights and how to protect them, we can provide you with the information you need. Contact us or call today at 714-505-3000 to schedule a consultation and learn more about how we can help you.
For the latest legal news, follow Brown & Charbonneau, LLP on Twitter and join us on Facebook, Instagram, and LinkedIn.
Brown & Charbonneau, LLP is a top-rated business litigation, corporate, real estate and family law firm in Irvine, California. We are honored to be named by Best’s Lawyers® as one of the Top Law Firms in the US, including the specialty area of commercial litigation. As an AV-rated law firm, we are proud of our 10.0 Superb Client Rating from Avvo. Our top-reviewed Southern California attorneys have also earned specializations from the State Bar of California, as Certified Trial Specialists, and are included amongst the elite attorneys to be named Super Lawyers®.
Should you have any other issues involving any of the below areas of practice, please feel free to contact us.
- General Business & Corporate
- Business Litigation & Contract Disputes
- Civil Litigation
- Partnership & Shareholder Disputes
- Fraud Claims
- Breach of Fiduciary Duty Claims
- Real Estate & Construction Disputes
- Trade Secrets, Non-Competes & Unfair Competition
- Employment Disputes
- Personal Injury & Elder Abuse Cases
- Trial Specialist
- Family Law
- Mediation
Our website is full of valuable information and resources. Our goal is to provide as much information as possible to assist all our clients in making fully informed decisions. Just click any area of interest.
Brown & Charbonneau, LLP publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.bc-llp.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.