Is a verbal contract enforceable?

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Is a verbal contract enforceable?

We were asked to be managers in a salon from the guy that owned it. But he said for tax reasons he wanted us to put the salon in our name, and in return we would get 20% of whatever money came in. He verbally agreed to pay for the work and materials that needed to be done before the salon opened and the things that would have to be left in his building of which my husband and I payed for. Once everything was running, he decided that we needed to pay him $2,500 every month for rent. We said no because that was not what was agreed on and left. He now won’t pay us and has been slandering our name. Could we sue him for other factors for that as well as embarrassment and stress?
Legally how can we get our money?

Asked on September 3, 2011 under Business Law, Idaho

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You neeed to speak with an attorney about this situation. Here are some factors to consider:

1) Generally, verbal, or more properly, oral agreements or contracts are enforceable. However, there are some exceptions, such as agreeents which will take more than one year to perform, leases for more than one year, and agreements which involve extending credit for more than $50k. From what you write, depending on how the deal was structured and the amount of work and material involved, one or more of these exceptions*could* apply.

2) Illegal contracts are unenforcable--if the essence of this deal was to try to defraud the government of taxes by putting the business in your name, while it was really owned by another, that could be an unenforceable illegal contract.

3) If you were involved in tryin to commit tax fraud, you could face liability for that.

4) Defamation is the public making of an untrue statement of facts--so, not a true statement, even if negative; and not an opinion--which damages a person's or business's reputation. If you think this is what happened, you may have a cause of action for defamation.


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