Elements of an Oral Contract California

An oral contract, also known as a verbal agreement, is a legally binding agreement made between two or more parties through spoken communication. Although written contracts are preferred in most cases, oral contracts are still enforceable under California law. However, it is crucial to understand what elements are necessary to create a valid and enforceable oral contract in California.

Offer and Acceptance

To create an oral contract, there must be an offer by one party to enter into an agreement with another party. The offer must be clear and specific, and the terms of the agreement must be identified. The offer must also be accepted by the other party without any changes to the original terms.


Consideration refers to something of value that one party agrees to give or do in exchange for the promises of the other party. In other words, there must be mutual benefits that each party gains from the agreement. If there is no consideration, the oral contract is not valid.

Intent to Create a Legal Relationship

Both parties must have the intent to create a legally binding agreement. It means that the parties understand that they are entering into a contract, and the agreement will have legal consequences if breached.

Capacity and Competence

Each party must have the capacity and competence to enter into the agreement. It means that they must be of legal age and have the mental ability to understand the terms of the contract. If a party is under the influence of drugs or alcohol, the oral agreement may not be enforceable.

Statute of Frauds

Although oral contracts are enforceable in California, certain contracts must be in writing to be valid under the Statute of Frauds. For example, real estate contracts, contracts that cannot be performed within one year, and contracts for the sale of goods over a specific amount are required to be in writing.


In conclusion, an oral contract can be just as legally binding as a written contract if it meets the necessary elements. However, oral contracts can be challenging to enforce because it may come down to one party`s word against the other`s. Therefore, it is crucial to be careful when entering into an oral agreement and to seek legal counsel for any questions or concerns.

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