Thought Leaders: Are Verbal Agreements Enforceable in Colorado?

To the surprise of many non-lawyers, most verbal agreements are enforceable under Colorado law, subject to a few categorical exceptions. Generally, the formation of a binding contract requires only that the contracting parties reach a “meeting of the minds” about the sufficiently definite terms of their agreement, and that the agreement is supported by adequate consideration. A contract may be evidenced by either the written or spoken words of the parties.

There are several categories of contracts, however, which courts may only enforce if a writing evidencing that agreement exists. The most common categories are:

(1) contracts for the transfer of land;

(2) contracts that cannot be performed in less than a year;

(3) contracts for the sale of goods over $500;

(4) contracts for loans over $25,000 involving a financial institution as the creditor; and

(5) marriage contracts, including prenuptial agreements.

Even still, these types of oral contracts may still be enforced under certain circumstances even if no writing exists. For example, if one of the parties partially performs their obligations under the oral agreement or relies on the other party’s contractual promise to their detriment, the contract may still be enforced.

It is always the best practice, however, to reduce all verbal agreements to a comprehensive writing, even if not required by law. When the agreement is reduced to writing, the document can speak for itself. Without a writing, proving the specific terms of the verbal agreement in court can be challenging. If the parties provide contradictory testimony on the terms of their agreement, the judge or jury is tasked with deciding to what, exactly, the parties agreed. A classic “he said, she said.” A factual dispute over the terms of the agreement can make the difference as to whether a case is resolved on a paper motion or proceeds to trial, making the litigation potentially exponentially more expensive. It is always a good idea to “get it in writing.”

In any case, when entering into a verbal agreement, it is advisable to seek the counsel of an attorney experienced in the subject matter of the agreement.