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Are oral agreements enforceable in your North Dakota business?

On Behalf of | Jul 1, 2024 | Business Law |

Oral agreements can be a convenient way to make business arrangements, but their enforceability can sometimes be tricky. In North Dakota, oral agreements are generally enforceable, but certain conditions and limitations apply.

Validity of oral agreements

Oral agreements in North Dakota are legally binding based on the state’s business law if they meet the basic contract requirements: offer, acceptance, and consideration. Both parties must agree to the terms, and there must be an exchange of value. However, proving the existence and terms of an oral agreement can be challenging without written evidence.

Statute of frauds

North Dakota’s statute of fraud requires certain types of contracts to be in writing to be enforceable. These include agreements for selling goods over $500, contracts that parties cannot perform within one year, and real estate transactions. If your business agreement falls into one of these categories, an oral agreement may not be sufficient.

Challenges in enforcement

Enforcing an oral agreement often relies on witness testimony and the behavior of the parties involved. Courts may consider any partial performance of the contract or any written communications that support the existence of the agreement. The lack of clear, written terms can lead to disputes and difficulties in enforcement.

Best practices for business agreements

While oral agreements are enforceable, documenting your business agreements in writing is always best. Written contracts provide clarity and protection for both parties, reducing the risk of misunderstandings and legal disputes. Ensuring all terms are clearly outlined in a written contract can help safeguard your business interests and foster successful partnerships.