Can a Verbal Agreement for More Than One Year be Enforceable?

A boyfriend and girlfriend go to a dealership to purchase a vehicle. The girlfriend does not have bad credit but has no credit history. The intent of the parties is for the vehicle to be titled in the girlfriend’s name with the boyfriend as a co-signer, if necessary. The parties submit credit applications and it is determined by the dealership that the girlfriend cannot purchase the selected vehicle individually. However, there are two options offered by the dealership. One is for the vehicle to be titled in both the girlfriend’s and the boyfriend’s names with financing at 21% per annum or to title the vehicle solely in the boyfriend’s name at 7.14 % per annum.

The parties have a verbal agreement in 2012 as follows: Because of the enormous savings of the lower interest rate of 7.14%, the vehicle will be solely titled in the boyfriend’s name and the girlfriend shall make all the monthly payments, insure the vehicle, and maintain the vehicle. Once the vehicle is paid off by the girlfriend, the boyfriend shall assign the title to the girlfriend.

The dealership proceeds with setting up financing in the boyfriend’s name and titles the vehicle in the name of the boyfriend.

The girlfriend performs as agreed in that she made all payments on the financing of the vehicle and insured and maintained the vehicle that was solely in the boyfriend’s name.

The now ex-girlfriend, after making the last payment, sought to have the vehicle assigned/the title transferred to her but her ex-boyfriend is now unwilling to transfer title. The vehicle is in the physical possession of the ex-girlfriend. The ex-boyfriend then files a replevin action in the District Court to obtain possession of the vehicle which is still in his name. (Replevin actions are typically brought by the title owner to obtain possession of their property.)

The court sets up a Show Cause Hearing and the court grants possession of the vehicle to the ex-boyfriend but requires the ex-boyfriend to post a bond in the amount of $13,000. He does not do this so the possession of the vehicle remains in the possession of the ex-girlfriend.

A trial on the merits is set in order to have the court decide whether the ex-boyfriend should get the vehicle back.

This is an actual case for which I was retained after the Show Cause Hearing and time had elapsed so that requesting discovery such as Interrogatories had passed as well as the right to obtain record depositions of bank records and to file a counter-complaint.

One of the major problems in this case was that there are laws against verbal agreements that require a verbal agreement to be performed within one year of the making of the verbal agreement or it is likely to be unenforceable. In other words, if the verbal agreement takes a year or more from its making to be completed, it must be in writing to be enforceable. There are exceptions following theories in the law called “equitable relief”. Equitable relief permits a party who has partly performed under a verbal contract to use this legal theory to prevail. Usually the standard of evidence in a civil case requires the party seeking relief (the ex-girlfriend) the provide the preponderance of evidence (that is more likely than less likely that the evidence will be believed and quantitatively 51%) However, the standard is higher for evidence in cases where equitable principles are applied. The level is called “by clear and convincing evidence”, meaning the evidence must be unequivocal, credible, and if both parties have opposite testimony, the Court may take the position that the ex-girlfriend has not met her burden of proof.

I did file a motion by what is called “leave of court” to be permitted to file discovery, a counter-claim, and seek the circuit court to hear the case because the damages were in excess of the court’s jurisdiction, however my motion was denied.

How we prevailed

I subpoenaed bank records from the banks from which payments were made.

My client’s (the ex-girlfriend’s) bank’s records showing all of her payments were obtained by subpoena.

I subpoenaed the payment records from the ex-boyfriend’s financing company as well as records from the dealer where the vehicle was purchased.

I subpoenaed the ex-boyfriend to bring to the merit’s hearing all records of his alleged payments which he did not have (because he most likely hadn’t made any payments).

Also, I had co-counsel at trial who did a great job.

At trial the ex-boyfriend testified that the ex-girlfriend was not the customer but we had certified records from the dealership, under affidavit, which showed that the ex-girlfriend was also the customer. He further testified that he had made the payments in cash but had no receipts, and he was not a credible witness.

The Court determined that the ex-boyfriend had not met his burden of proof and therefore he was not granted possession of the vehicle. He agreed to sign over title to the vehicle and did so.

This case was unusual in many ways, including that verbal agreements that require performance for more than a year are very hard to prove and that I was brought in after the time had passed to perform discovery and obtain very important information ahead of the trial date. Also, the Court, on the date of trial, grants the attorney and or parties to view the subpoenaed documents only in the courtroom.

Fred Antenberg has experience in handling cases wherein a verbal agreement that is more than a year from its making needs to be enforced as well as obtaining the return of engagement rings that are conditional gifts (with some exceptions).

Call Fred today for a free initial consultation at 410 730 4404.