Oral contracts – Colorado
As a general rule of Colorado law, an oral contract is just as enforceable as a written contract. The primary difference is that it is harder to prove oral contracts. An unsigned written agreement may be evidence of an agreement between the parties. An agreement may be oral or implied by the parties’ conduct. (Behavior of the parties is consistent with terms of the alleged contract.) The Kentucky Court of Appeals held that parties may be bound by the terms of an unsigned contract when their actions demonstrate assent to the agreement. Similarly, the Illinois Court of Appeals held that party named in an unsigned contract may, by his conduct, indicate his assent to its terms and become bound by it.
The Colorado “statute of frauds” does require that certain contracts be in writing. Section 38-10-112 of the Colorado Revised Statutes says the following are void agreements, if not written:
(a) Every agreement that by the terms is not to be performed within one year after the making thereof;
(b) Every special promise to answer for the debt, default, or miscarriage of another person;
(c) Every agreement, promise, or undertaking made upon consideration of marriage (prenuptial and post-nuptial agreements), except mutual promises to marry .
Another section in the Colorado statute of frauds voids leases longer than one year, or transfers of real estate, unless the agreements are written. Section 38-10-108, Colorado Revised Statutes.
However, Colorado courts have the authority to enforce an oral contract, despite the statute of frauds, in cases of part performance of such agreement. The part performance must be substantial, not minimal. The theory behind this is that a party to an agreement should not be able to use of the statute of frauds as an instrument or shield for fraud against the party who performs the contract, whether or not it is oral. One of the leading cases discussing oral contracts and part performance involved John Elway. Nelson v. Elway, 908 P.2d 102 ( Colorado Supreme Court 1995).