What can be upheld in a verbal contract?
UPDATED: Sep 30, 2022
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What can be upheld in a verbal contract?
My aunt employed me during high school. I worked nights and weekends under the table. I started college close enough to home that I continued working for her. This was no issue, as I had planned to move on. After college, I had several good job offers. I prepared to move on with my life but she got sick and some employees quit. I was nice enough to stay on and help. It took her 2 years to recover and I had managed a lot of affairs for the business. By this time, I was having a harder time finding more good job offers. They were still out there possibly, however she had become more dependent on me and insisted I not look so hard. Eventually, she told me that I should stay on and she would simply give me the business when she retired. This was in exchange for my low wage and heavy hours. I had often worked 70-80 hours and at one point worked 28 straight days without a day off. I received no overtime or other benefits. It was not until age 26 that I was offered insurance and a normal paycheck so I finally started at least getting SS credit, but still no overtime or greater wage. I am now 36. I have worked for her many years. It has been 15 years since the promise she would give me the business. She is now 63 and preparing to retire. I have honored my part of the deal by working cheaper, running much of the business, and building income I thought would by mine. Now, she refuses to give me the business. At times she insists that I need to buy it. Yet, she also refuses to even set clear terms for this and continuously avoids the topic.
Do I have any legal protection at all? I have wasted 15 years of my
life and lost more wages than I can ever recover, if I do not find
the arrangement honored. I had to get food stamps raising a family
and was paid minimum wage, yet had turned down jobs paying 50k a
year. This sacrifice was only because I believed the end result
would be worth it.
Asked on January 2, 2017 under Business Law, Pennsylvania
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
As a general matter, an oral contract ("oral," not "verbal," is the correct term for an unwritten contract) is enforceable, so long as--
1) There was mutual agreement--e.g. even though it was not written down, you both clearly understood the terms, which appears to have been the case; and
2) There was an exchange of consideration, or things or promises of value, given by each party to the other party, such as the work you did for her at below fair market value for your labor in exchange for her promise to give you the business, and/or you giving up other job opportunties for the chance to get this business.
So this agreement should in theory be enforceable in court, though if the agreement was you'd get the business when she "retired," it would not be until she retires that you could get try to enforce the agreement--i.e. it's not until she retires and then fails to give you the business that she would have breached the agreement. Until she retires, she does not, based on what you have written, have to do or give you anything. So as long as she is still working in the business, she does not have to give it to you, no matter how long you have been waiting.
Also, proving the existence or terms of an oral contract can be difficult if the other side (your aunt) disputes your version of what was said or agreed to. So while you do have a legal right to enforce an unwritten agreement, doing so presents challenges.
Since she could simply keep working in the business until she dies and so never "retires," you may try to sweeten your offer to her, especially if you are confident of your ability to run and keep growing the benefit: getting her to turn it over to you voluntarily is probably in your interest.
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