You sometimes hear people say, “That’s just an oral contract. It doesn’t count.” This is incorrect. Most oral contracts do, indeed, count. But their terms are usually hard to prove.

Montana law provides, “All contracts may be oral except such as specifically by statute to be in writing.” MCA 28-2-901. Another statute, MCA 28-2-903, states which contracts must be in writing: contracts that take more than a year to perform, a promise to answer for the debt of another, the sale of real property or an interest in real property, and real estate broker contracts. Commercial contracts under the Uniform Commercial Code can be oral and are governed by that series of statutes (the details of which are beyond the scope of this short article). A written contract must be memorialized in writing, of course, and “subscribed” by the party or parties obligated. “Subscribed” basically means a signature or other writing showing agreement such as a reply email.

The issue with oral contracts isn’t whether they “count” but how to prove their terms. It usually involves a “he said, she said” battle of testimony. It is by far better to get the terms of the deal of the agreement – even if only a brief description of them – in writing and signed by the other party or a reply email showing agreement. This makes proving the terms much, much easier.

Bottom line: In Montana, most “handshake” deals count but their terms are hard to prove.

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(This information is of a general nature; exceptions to these general statements might exist. This information is for general educational purposes only; no attorney-client relationship with Overstreet Law Group, LLC is formed unless a person enters into a written representation agreement with the firm.)