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Law & Litigation Blog

Can You Sue for Breach of an Oral Contract Under Ohio Law?

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The answer is yes. Ohio's 12th District Court of Appeals just decided the case of Frisby v. Solberg. I thought I would include it because it not only lays out the standard for proving a breach of contract very precisely, but also addresses oral contracts.

This was an interesting case of a friendship gone bad. The Plaintiffs (Husband and Wife) and the Defendant (a former friend of theirs) entered into a business arrangement where, from what I can tell from reading the opinion, they pooled their money to buy old motorcycles and motorcycle parts, fix them up (the bikes and the parts) and sell them. But they didn't make a ton of money and ride off into the Sunset together - the Defendant allegedly failed to pay the Plaintiffs half of the profits after the Plaintiffs did the work to fix up the bikes and the parts. 

The Plaintiffs sued. The Defendant claimed, essentially, that there was no partnership. She claimed that she only agreed to pay the Plaintiffs for their labor, not split the profits with them:

{¶ 2} The Solbergs argued that the parties entered into a partnership for this business venture where they would be paid for the work completed on the motorcycles and motorcycle parts and split the profits with Frisby once they were sold. On the other hand, Frisby denied that any partnership was ever established. Instead, Frisby argued that she merely agreed to pay the Solbergs for the parts and work necessary to have the motorcycles repaired, splitting any proceeds from the sale of unused parts, but not the motorcycles themselves.

This arrangement sounds a little strange, and it appears a lot of details are missing. Apparently, nothing was in writing. Reading between the lines, I get the feeling there were more dealings between the parties that neither party disclosed in Court. Ultimately, the Plaintiffs won, in part because their testimony came off as being more credible (the Defendant admitted to offering someone $30,000 to testify in her favor, though she claimed to have been drunk at the time), and, probably, because the Defendant's version of events - that she agreed to pay the Plaintiffs half the profits on the parts only, though they would repair both the parts and the actual motorcycles - does not appear to make a lot of sense. The Court found that the Plaintiffs had proven the existence of an oral contract.

On appeal, the judgment in favor of the Plaintiffs was affirmed, but the amount of damages was reduced. The 12th District Court of Appeals (known for having very smart Judges), laid out the standard for breach of contract perfectly:

{¶ 9} In order to establish a breach of contract claim, a plaintiff must prove (1) the existence of a contract, (2) plaintiff fulfilled its contractual obligations, (3) defendant failed to fulfill its contractual obligations, and (4) plaintiff incurred damages as a result. Underwood v. Boeppler, 12th Dist. Butler No. CA2014-02-055, 2015-Ohio-156, ¶ 13. The essential elements of a contract include an offer, acceptance, contractual capacity, consideration, a manifestation of mutual assent, and legality of object and consideration. Artisan Mechanical Inc. v. Beiser, 12th Dist. Butler No. CA2010-02-039, 2010-Ohio-5427, ¶ 26. "Mutual assent or 'a meeting of the minds' means that both parties have reached an agreement on the contract's essential terms." Nguyen v. Chen, 12th Dist. Butler No. CA2013-10-191, 2014- Ohio-5188, ¶ 43, citing Id. at ¶ 27. The essential terms of a contract include the identity of the parties to be bound, the subject-matter of the contract, the consideration to be exchanged, and the price to be paid. Turner v. Langenbrunner, 12th Dist. Warren No. CA2003-10-099, 2004-Ohio-2814, ¶ 13. 

{¶ 10} An oral contract may be enforceable when the terms of the agreement are sufficiently particular. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, ¶ 15. "Terms of an oral contract may be determined from the parties' words, deeds, and acts, as well as their silence." A N Bros. Corp. v. Total Quality Logistics, L.L.C., 12th Dist. Clermont No. CA2015- 02-021, 2016-Ohio-549, ¶ 26. However, seldom, if ever, does the evidence establishing an oral contract present its terms in the exact words of offer and acceptance found in formal written contracts. Depompei v. Santabarbara, 8th Dist. Cuyahoga No. 101163, 2015-Ohio- 18, ¶ 22. Rather, the goal in enforcing oral contracts is to hold people to the promises they make. Id. "In a bench trial, the trial court, as the trier of fact, must resolve any evidentiary conflict surrounding disputed provisions of an oral contract." Ford v. Van Stop, Inc., 12th Dist. Butler No. CA98-03-064, 1998 WL 904677, *2 (Dec. 30, 1998).

This is a great checklist to use in preparing for discovery/deposition/trial strategy in a breach of contract case, and could also be used to cite the standard for breach of contract in a Motion or Appellate Brief.

 

Alex Durst is a Cincinnati business litigation attorney with The Durst Law FirmLicensed in Ohio, Alex has also practiced in Missouri, Florida, Indiana, California, Nevada, Massachusetts, and Kentucky. Alex can be reached at (513) 621-2500 or alex@durstlawfirm.com.