Is a verbal agreement valid?

UPDATED: Sep 3, 2011

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Is a verbal agreement valid?

I’m in a situation where my sister (POA) of my parent’s estate found a check for $25,000 that had “loan” in the memo. Through the years all of us kids received X-mas money, etc. It was a verbal understanding with my parents that my moneys would go towards my loan. My fear is without anything in writing I’m going to be held responsible twice for that money that’s been paid back over time. My sister and I haven’t had a good relationship for some time now and she will stick it to me every chance she can get. Can I tell her that my parents and I had a verbal agreement and that this has been paid in full?

Asked on September 3, 2011 under Bankruptcy Law, Nevada


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

As a general matter, oral or verbal agreements, including oral or verbal loan agreements, are valid. The difficulty is proving them--i.e. providing what the agreement was. A more significant difficulty from the point of view of proving repayment of the loan is that if someone has repaid a loan, that person would ordinarily be able to document repayment by cancelled checks, receipts for money orders, etc. From what you write, it seems that your "loan" was "repaid" by not giving you X-mas money and the like and applying the amount to the loan. (Note: if the money never changed hands, this is more like gradual loan foregiveness, not repayment.) This will be very difficult to prove and may (if a lawsuit ensues) be difficult for a judge or jury to believe, since it is so "convenient" for the debtor. (Consider: you would be arguing that $25,000 was repaid without any documentation whatsoever.)

You should consult with an attorney about your situation in detail. Possibly ways to defend yourself:

1) Some contracts have to be wrting to be enforced; depending on the exact terms of the loan, this *could* be one of them. That lack of enforceability may help you.

2) Writing "loan" in the memo space of the check is evidence that it is a loan (rather than a gift), but it may not be enough--possibly you can provide evidence or testimony that this was actually a gift.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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