Generally, verbal contracts are enforceable, although they are very difficult and expensive to prove. Thus, contracts should always be committed to writing. However, although verbal contracts are valid, some contracts must be in writing to be enforceable. States vary in their interpretation, but under the Restatement (Second) of Contracts § 110, certain classes of contracts require a written memorandum or an applicable exception to be enforceable (some examples are listed below).
§ 110. Classes of Contracts Covered.
(1) The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception:
(b) a contract to answer for the duty of another (the suretyship provision);
(c) a contract made upon consideration of marriage (the marriage provision);
(d) a contract for the sale of an interest in land (the land contract provision);
(e) a contract that is not to be performed within one year from the making thereof (the one-year provision).
(5) In many states other classes of contracts are subject to a requirement of a writing.
*Also, see UCC § 2-201 for sections pertaining to the sale of goods.
What does that mean in plain English? Generally, a verbal contract is enforceable. However, certain contracts are only enforceable when they are in writing; for example, contracts pertaining to marriage, selling land, some contracts for the sale of goods, and a contract that is not to be performed within one year.
The take away. Commit every contract to writing, avoid “he said – she said” cases; they are expensive. Contracts help parties understand and prove their promises and obligations. Regardless, even if you don’t commit every promise to writing, be sure you understand that certain contracts must be in writing to be enforceable. The take away – play it safe, always commit it to writing, especially in certain situations.