Suing for Money Owed Without a Contract
If you rushed into a business transaction or loaned money to a friend in need and haven’t been paid back, you may have questions about suing for money owed without a contract. Just watch an episode of People’s Court or Judge Judy and you’ll see that, yes, you can sue over a verbal agreement. But you have to prove your case, which can prove to be difficult.
When Are Verbal Agreements Legally Binding?
In order to sue someone for breach of an oral contract, you need to prove that a binding agreement was in place. There are four basic elements to a legally binding verbal or written contract:
- Offer: An offer must be made by one person.
- Acceptance: The terms of the offer must be accepted by the other party.
- Meeting of the minds: Both parties must have an understanding that an agreement has been formed and freely consent to the terms of the agreement.
- Consideration: The agreement must involve an exchange of consideration, or something valuable, between the parties. Consideration usually takes the form of money.
In addition to these four elements, a binding agreement must have a lawful purpose and clear terms. So, the contract cannot provide money for someone to do something illegal or have ambiguous or incomplete terms.
When Are Verbal Agreements Not Binding?
Certain types of contracts must be in writing under Texas law. These include agreements for the sale or transfer of land or real estate, leases, and commissions for oil and gas drilling. A written contract is also required when:
- The terms of the contract outlast the lifetime of one of the parties (copyright, for example) or will take longer than one year to carry out;
- Goods sold under the contract have a value of over $500;
- The agreement is related to marriage or divorce; or
- The contract involves a promise to pay someone else’s debt.
Proving Breach of a Verbal Contract
Proving your case is really where the hard work comes in. Without a written agreement, the “burden of proof” is on you. You must show that the amount you are claiming is owed to you. The person who owes you money can actually get away without saying a thing. That’s because they don’t have to prove they’re innocent.
You should keep records of or obtain the following documents or pieces of information while preparing for your court case:
- Documentation of collection attempts: Going to court should be a last resort. You should first send letters, emails, text messages, or social media messages to the person who owes you money. This is to prove that a debt is owed and overdue. If the other party responded by apologizing or asking for more time, you can use the communication as proof that they know they owe the debt. Make sure to keep records of these communication and any other attempts to mediate the debt.
- Bounced check: If the person who owes you money sent you a check that bounced, you can use it as evidence that they promised to pay you and money is due.
- Unpaid invoice: If you’re a business and you’re owed money from a customer or client, any invoices you sent to request overdue payment can be used as evidence proving that a debt is owed.
- Documentation of a portion of the debt paid: If the verbal contract was over a loan and the person who owes you money made some payments towards it, make sure you save proof that they made payments (a bank statement, for example). It’s hard to deny a loan happened when they have already made some effort to repay it.
- Witnesses: If you have witnesses to the agreement, make sure you bring them to court with you. If you have text messages, emails, phone messages or anything else that can serve as a written witness statement to back up your claims, make sure you save them on your mobile device and make a printed copy.
Learn More About Suing for Money Owed Without a Contract
In the future, you should remember to follow up a verbal contract immediately with a letter or email. That way, you can get it in writing just in case something bad happens again.
Thinking about suing for money owed without a written contract? Have a qualified, experienced attorney at your side to help you compile evidence and find witnesses to support your case. The skilled litigation attorneys at Allmand Law Firm, PLLC are available to resolve your breach of verbal contract case. Contact Allmand Law Firm, PLLC today.