I'm Confused About Oral Contracts. Are They Binding?

Oral contracts can be as binding as written contracts. But without a written record, it can difficult to prove what you have agreed to. If your deal goes south, you may be endlessly chasing the truth.

Often parties enter into agreements that are partially oral and partially written, based on a handshake and a few letters or memos that may indicate some of the aspects of the agreement without actually being contracts themselves. In this case, the "agreement" is contained partly in the oral agreement and partly in the letters and memos. Put all the information relating to your agreement in one place -- a single, clear and complete written contract.

Some oral contracts are legally unenforceable. These four types of contracts, which involve a high risk of fraud, typically must be in writing by law. They are:

Contracts for the sale or purchase of land

Contracts for the sale or purchase of goods priced at $500 or more (with a few significant exceptions)

Marital settlement or prenuptial contracts

Contracts that cannot be performed within one year of the time the contract is made