A handshake and a promise may be an amicable and honorable way to make an agreement, but is it legally binding?
In Washington, the answer is: sometimes. Whether an oral contract is enforceable in Washington depends upon the circumstances surrounding the terms of the agreement—most notably, whether the agreement falls under the provisions of the so-called “Statute of Frauds,” requiring that certain types of contracts must always be in writing and signed by the parties to the agreement (or at least, in some circumstances, signed by the party against whom enforcement is sought).
Although there are some exceptions, the following kinds of agreements generally must be in writing to be enforceable under Washington law:
- Sales of goods for which the purchase price is over $500 (with an exception for goods “specially manufactured” for the buyer that cannot be resold by the seller in the ordinary course of business);
- Sales or purchases of real estate as well as real-estate brokers’ commissions;
- Contracts that, by their terms, cannot be performed within a year;
- Promises made by an executor or administrator to cover damages from their own estate.
Provided it does not fall within one of the categories above, an oral contract is just as “enforceable” as a written contract—if you can prove its existence.
Whether the contract is written or oral, the party asserting a breach must prove the subject matter of the contract, the parties, the promise, the terms and conditions, and (in some circumstances and in some jurisdictions) the price or consideration. Proving these things may be harder without anything in writing, but it is not impossible. And to the extent there are writings pertaining to terms of the contract, they are evidence (and perhaps good evidence) of what the parties agreed even if they do not amount to a contract in themselves.
There is another important, practical difference regarding the enforcement of oral and written contracts in Washington. The statute of limitations requires a plaintiff to bring a cause of action for breach of an oral contract within three years of the date of the alleged breach. For written contracts, the time limit is generally six years.[ii]
Because proving the existence of an oral agreement can be time-consuming and costly, and involves additional layers of uncertainty, it is generally advisable to put the terms of agreements in writing. But there is nothing about an oral contract that makes it unenforceable per se, provided it is not a contract required by statute to be in writing.
[i] RCW 19.36.010.
[ii] RCW 4.16.080.