Also known as: parol contracts · oral contract · verbal contract
Written by attorneys — see sources below.
An agreement formed by spoken words or conduct rather than a complete signed writing. At common law the term also denotes any contract not executed under seal even if reduced to writing.
Pamela Phillips orally agreed to sell land to Piper Patel. Pamela later mailed a signed letter describing the price and closing date but omitting Piper's name. The name and address on the envelope arrived with the letter. The two documents together satisfy the statute of frauds requirement for a memorandum.
Pilar Pena orally promised to manage Premier Manufacturing's warehouse for two years. After Pilar completed ten months of work the company repudiated the deal. A signed letter the company sent two weeks later reciting the two-year term and monthly fee constitutes a sufficient memorandum even though written after breach.
Patricia Patel orally promised to give her home to Pablo Perez if he moved in and cared for her for life. Pablo sold his business and performed the services for five months until Patricia died. Because no signed writing exists the oral promise remains unenforceable under the statute of frauds.
In June 1918, James A. Halsey, an old man and a widower, was living without family or housekeeper in his house in Hornell, New York. He told the plaintiffs that if they gave up their home and business in Andover, New York, and boarded and cared for him during his life, the house and lot with its furniture and equipment would be theirs upon his death. The plaintiffs did as he asked, selling out an interest in a little draying business in Andover and boarding and tending him until he died about five months after their coming. Neither deed nor will nor memorandum subscribed by the promisor exists to authenticate the promise, and the plaintiffs ask specific performance. During Halsey's lifetime the plaintiffs had no possession of the property and did not occupy it as owners. Halsey retained possession, and the plaintiffs lived with him merely as his servants or guests who could be asked to leave at any time. The plaintiffs paid food bills and performed housekeeping work while Halsey paid the taxes and upkeep costs. There were ties of kinship between one of the plaintiffs and Halsey.
View casePearl Porter orally agreed to sell a vacant lot to Piper Patel for cash. Relying on the promise Piper sold her own home and deposited the proceeds. When Pearl refused to convey the lot the court held that detrimental reliance removed the oral contract from the statute of frauds bar.
Mrs. Gladys Green owned a lot known as Lot S in the Manomet section of Plymouth. In July 1980 she advertised the lot for sale. On July 11 and 12 of that year, Mr. and Mrs. Hickey met with Mrs. Green to discuss purchasing the lot and reached an oral agreement to buy it for $15,000. On July 12 the Hickeys gave Mrs. Green a deposit check for $500. The check was marked on the back with the notation "Deposit on Lot . . . Massasoit Ave. Manomet . . . Subject to Variance from Town of Plymouth," but the payee line was left blank. Mrs. Green held the check without filling in the payee name, cashing it, or endorsing it. By July 16 it was determined that no zoning variance would be required. Relying on the arrangements with Mrs. Green, the Hickeys advertised their house on Sachem Road for sale in newspapers on three days in July 1980. They agreed to sell their house to a purchaser and accepted a $500 deposit check from that purchaser, which they deposited in their own account. On July 24 Mrs. Green informed the Hickeys that she no longer intended to sell the lot to them and had decided to sell it to another buyer for $16,000. The Hickeys offered Mrs. Green $16,000 for Lot S, but she refused the offer. The Hickeys filed a complaint in the Superior Court seeking specific performance of the agreement with Mrs. Green. The case was presented on a stipulation of facts with attached documents, which the Superior Court judge adopted as findings. The trial judge granted specific performance to the Hickeys. Mrs. Green appealed the decision to the Appeals Court of Massachusetts.
View casePamela Phillips and Pablo Perez lived together for years under an oral understanding that they would share earnings and property. After separation Pamela sought enforcement of the agreement. The court examined whether the parol contract could be proved by conduct and writings outside the statute of frauds.
In June 1960, while students at Grinnell College in Iowa, Victoria Hewitt became pregnant by Robert Hewitt. Robert told Victoria that they were husband and wife and would live as such without a formal ceremony, and that he would share his life, future, earnings, and property with her. The parties announced to their parents that they were married and held themselves out as husband and wife thereafter. Victoria devoted her efforts to Robert's professional education in pedodontia, obtaining financial assistance from her parents, and assisted in his career by placing her payroll checks into a common fund. Three children were born to the parties during their relationship, which lasted until 1975. By that time, Robert earned over $80,000 a year and had accumulated substantial property, some held jointly and some separately. Victoria initially filed a complaint for divorce, but at a hearing on Robert's motion to dismiss, she admitted that no marriage ceremony had taken place and that the parties had never obtained a marriage license. The trial court dismissed the complaint, finding no ceremonial or common law marriage existed, and directed Victoria to make her complaint more definite regarding the property. Victoria then filed an amended complaint alleging an express oral contract to share property, an implied contract from the parties' conduct, a constructive trust based on fraudulent assurances, and unjust enrichment from her detrimental reliance. The trial court dismissed the amended complaint, finding that Illinois law and public policy require such claims to be based on a valid marriage. The appellate court reversed, and the Supreme Court of Illinois granted leave to appeal.
View casePioneer Energy entered oral royalty agreements with thousands of owners. When royalty calculations became disputed the owners filed a class action. The court addressed whether the parol contracts could be enforced uniformly across the class without individualized writings.
Phillips Petroleum Company, a Delaware corporation with its principal place of business in Oklahoma, produced or purchased natural gas from leased land in 11 states during the 1970s. It sold most of the gas in interstate commerce at prices regulated by the Federal Power Commission, later the Federal Energy Regulatory Commission. Beginning in the mid-1970s Phillips proposed price increases. It collected higher amounts subject to refund with interest if disapproved. Phillips suspended royalty payments to lessors until final Commission approval. It paid the suspended royalties of $3.7 million in 1976, $4.7 million in 1977, and $2.9 million in 1978 without interest after the increases were approved. In 1979 the Commission began investigating overcharges. In 1983 it issued an opinion ordering refunds. Royalty owners Irl Shutts, a Kansas resident, and Robert and Betty Anderson, Oklahoma residents owning leases in Oklahoma and Texas, filed suit in Kansas state court seeking interest on the suspended royalties. They sought to represent a class of 33,000 royalty owners later reduced to 28,100 members after 3,400 opted out and 1,500 could not be notified. Fewer than 1,000 class members resided in Kansas and only about one-quarter of one percent of the leases were located there. The Kansas trial court certified the class under a state statute modeled on Federal Rule of Civil Procedure 23 on an opt-out basis. It sent first-class mail notice describing the action and the right to opt out. The court applied Kansas law to award interest at Commission rates followed by the Kansas post-judgment rate of 15 percent. After the Kansas Supreme Court affirmed, the United States Supreme Court granted certiorari in 1984.
View caseA parol contract satisfies the statute when a signed writing made before or after formation serves as a sufficient memorandum of its terms. Multiple documents may be read together if the signed writing refers to the unsigned one or the parties enclose them in the same envelope.
Once one party has completely performed its obligations within a year the statute of frauds no longer bars enforcement of the other party's promise to pay even though the original agreement could not have been performed within one year.
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Restitution is available for services rendered or expenses incurred in reliance on a parol contract that the statute of frauds renders unenforceable provided recovery is limited to the reasonable value of the benefit conferred and does not frustrate the statute's purpose.
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After the seller conveys land by deed the buyer's promise to pay the price ceases to be within the statute of frauds unless the price itself consists of an interest in land.
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…has been sought. Texas courts have, however, specifically permitted recovery at higher rates when a contract, even an implied or oral contract, evidences agreement to such rates. Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enterprises , 625 S. W. 2d 295 (Tex. 1981); Moody v. Main Bank of Houston , 667 S. W. 2d 613 (Tex. App.…