Michigan Verbal Agreement Laws: Understanding the Rules

Verbal agreements can be a convenient way to establish a contract between two parties without the need for lengthy paperwork and legal procedures. However, many people tend to overlook the fact that verbal agreements are not legally binding in every situation. In the state of Michigan, there are specific laws that govern the validity of verbal agreements and the criteria that must be met for them to be enforceable.

If you are planning to enter into a verbal agreement in Michigan, it is essential to understand the rules and regulations before proceeding. Here are some of the key points you should know about the verbal agreement laws in Michigan.

Enforceable versus non-enforceable

In Michigan, verbal agreements are considered enforceable if they meet certain criteria. According to the Michigan Statute of Frauds, any contract that involves the sale of goods worth $1,000 or more must be in writing and signed by both parties to be enforceable. Additionally, contracts for the sale of real property or leases that last for more than one year also must be in writing.

Outside of these specific situations, verbal agreements can be enforceable as long as they meet the requirements of a legally binding contract. This means that the agreement must have an offer, acceptance, consideration, and mutual assent. Essentially, this means that both parties must clearly express their intent to be bound by the terms of the agreement.

Evidence of the agreement

One of the biggest challenges of verbal agreements is the lack of documentation. In the event of a dispute or breach of contract, it can be challenging to prove the terms of the agreement if no written record exists.

However, Michigan law does provide some protection for parties who enter into verbal agreements. Michigan has a rule called the “parol evidence rule,” which states that any prior agreements or negotiations that are not included in the final written contract are not admissible in court. This means that if a party can show that a verbal agreement existed before a written contract, that agreement may be enforceable even if it is not in writing.

Statute of limitations

When it comes to verbal agreement disputes, time is of the essence. Michigan has a statute of limitations that limits the amount of time a party has to file a lawsuit for a breach of contract claim. In Michigan, the statute of limitations for breach of contract claims is six years from the date of the breach.

This means that if a party believes that the other party has breached a verbal agreement, they must file a lawsuit within six years of the date of the breach. If they fail to do so within the allotted time frame, they may lose their legal right to sue for damages or other remedies.

In conclusion, Michigan`s verbal agreement laws are complex, and it is essential to consult an experienced attorney if you are entering into a verbal agreement. While verbal agreements are generally enforceable in Michigan, they must meet specific criteria, and there are limitations and challenges to enforcing them in court. By understanding the rules and regulations, you can protect yourself and ensure that your agreement is legally binding and enforceable.