Business Law
Often, yes. California lets most contracts be made orally, but Civil Code section 1624 requires a signed writing for some deals, including agreements that cannot be performed within a year, promises to pay someone else's debt, and real estate sales and longer leases. A lawsuit on an oral contract generally must be filed within two years, compared with four years for a written one.
Last updated October 5, 2026.
Plenty of business gets done on a handshake: a supplier's promise on the phone, a split of profits agreed over coffee, a remodel priced in a text. Contracts are a core part of our business law practice, and the first question in many disputes is whether the deal was ever enforceable at all. This page explains the California rules for oral agreements, the exceptions that require a writing, how oral terms are proved and the deadlines that apply.
Civil Code section 1550 lists four essentials: parties capable of contracting, their consent, a lawful object and sufficient consideration. Nothing in that list requires paper. Under section 1622, all contracts may be oral except those that a statute specifically requires to be in writing. Section 1619 adds that a contract may be express, stated in words, or implied from conduct. An oral agreement that meets the four essentials and is not on a statutory "writing required" list can be enforced like any other contract; the harder part is usually proving what the terms were.
Under Civil Code section 1624(a), the following are invalid unless they, or some note or memorandum of them, are in writing and signed by the party to be charged or that party's agent. Other statutes add their own writing rules.
| Type of agreement | Rule | Law |
|---|---|---|
| An agreement that by its terms is not to be performed within a year from when it is made | Writing signed by the party to be charged | Civ. Code 1624(a)(1) |
| A promise to answer for another's debt, default or miscarriage (a guaranty), except as section 2794 provides | Writing signed by the party to be charged | Civ. Code 1624(a)(2) |
| A lease for longer than one year, or a sale of real property or an interest in it | Writing; an agent's authority must also be in writing | Civ. Code 1624(a)(3) |
| Hiring a broker or other person to buy, sell or lease real estate for more than a year for a commission | Writing signed by the party to be charged | Civ. Code 1624(a)(4) |
| An agreement not to be performed during the lifetime of the promisor | Writing signed by the party to be charged | Civ. Code 1624(a)(5) |
| A business lender's commitment to lend or extend credit over $100,000, not primarily for personal, family or household purposes | Writing signed by the lender | Civ. Code 1624(a)(7) |
| A sale of goods for $500 or more | A signed record sufficient to show a contract for sale, with exceptions for specially manufactured goods, admissions in court, and goods paid for and accepted or received and accepted | Com. Code 2201 |
| An employment contract paid by commission | Written contract stating how commissions are computed and paid, with a signed copy to the employee | Lab. Code 2751 |
Section 1624(a)(6) adds a rule for a buyer of real property who agrees to pay a loan secured by the property, and sections 1624(b) and (d) contain special rules for certain financial contracts between businesses and for electronic messages in real estate deals.
| Claim | Deadline | Law |
|---|---|---|
| Breach of a contract not founded on a writing | 2 years | CCP 339(1) |
| Rescission of a contract not in writing | 2 years from the facts that allow rescission (from discovery, if fraud or mistake) | CCP 339(3) |
| Breach of a contract founded on a writing | 4 years | CCP 337(a) |
| Book account, account stated based on a written account, or an open account with written items | 4 years | CCP 337(b) |
| Rescission of a written contract | 4 years from the facts that allow rescission (from discovery, if fraud or mistake) | CCP 337(c) |
A mixed deal, such as a short written quote followed by oral changes, can raise a question about which deadline applies, so it is safer to plan around the shorter one. Our page on deadlines to sue for breach of contract or property damage in California covers how these periods are counted and what can pause them.
Section 1624(a)(1) reaches only agreements that, by their own terms, are not to be performed within a year from when they are made. The words "by its terms" point to what the parties agreed, not to how long the work happened to take. A commitment to supply goods every month for two years falls inside the rule; a remodel scheduled for six weeks does not become a one-year contract because it ran late.
The statute is satisfied by "some note or memorandum" signed by the party to be charged, not only by a formal contract. A signed proposal, a confirming letter or an invoice the other side signed may help. Whether a particular email or message counts depends on what it says and how it was signed, so preserve everything.
Civil Code section 1698 lets a written contract be modified by a written agreement, by an oral agreement to the extent the parties have carried it out, or, unless the contract says otherwise, by an oral agreement supported by new consideration. If the modified contract falls within section 1624, the writing requirement still applies (section 1698(c)). Many written contracts say changes must be in writing; read that clause before relying on a conversation.
A promise to pay a customer's or a relative's business debt if they do not is a "special promise to answer for the debt, default, or miscarriage of another" and needs a signed writing under section 1624(a)(2). A verbal "don't worry, I'll cover it" from a third party is a common source of disputes.
Commercial leases longer than one year and agreements to buy or sell property must be in writing (section 1624(a)(3)), and a broker's commission agreement for those deals must be too (section 1624(a)(4)). A month-to-month or one-year arrangement for space falls outside the one-year lease rule.
Even a valid contract can be hard to enforce for procedural reasons. A business using an unfiled fictitious name may not maintain a lawsuit on contracts made in that name until it files and publishes its statement (Business and Professions Code section 17918); see fictitious business name rules in Los Angeles County. And contracts a company makes while its powers are suspended by the Franchise Tax Board are voidable by the other side (Revenue and Taxation Code section 23304.1), as our page on a suspended LLC or corporation explains.
For example, imagine a hypothetical Glendale bakery owner who agrees by phone with a local contractor to remodel the shop's counter area for $20,000, half paid up front and half on completion, with the work to be finished in six weeks. The contractor texts "Confirmed, starting the 3rd, $20k total" and cashes the $10,000 check. Nothing else is signed.
The agreement is not on the section 1624 list: it can be performed well within a year, it is not a real estate sale or long lease, and no one is guaranteeing another's debt. The text message, the cashed check and the work itself are evidence of the terms. Suppose the contractor stops after demolition and does not return. The owner's claim would be a breach of an oral contract, so Code of Civil Procedure section 339(1) gives a two-year limit, counted from the breach.
As an illustration of the arithmetic only: if finishing the work costs the owner $14,000 more than the $10,000 still unpaid under the deal, the difference she might claim is $4,000, plus other provable losses. Whether she could recover that, and how much, depends on evidence and defenses this example does not address.
It can be strong evidence of an oral agreement's terms, and in some cases it may serve as the signed "note or memorandum" section 1624 calls for. Whether it does depends on its content and how it was signed, so keep the full thread rather than screenshots of single messages.
It can be. Under Corporations Code section 16202(a), two or more people who carry on a business as co-owners for profit form a partnership whether or not they intend to, and the statute's default rules then apply. Our page on what happens when a business partner wants out explains those rules.
They are harder to prove, because the court has to decide what the terms were from testimony and surrounding evidence.
Oral deals rarely include an attorney fee clause, and that clause is usually what makes fees recoverable in a contract case. Our page on recovering attorney fees under a contract explains when fees are available.
The written part, its terms about changes and any merger clause will matter. Section 1698 governs oral changes to written contracts, and the deadline to sue may differ between the written and oral parts, so plan around the two-year period until a lawyer reviews it.
No. Code of Civil Procedure section 312 runs the period from when the cause of action accrues, not from the day the deal was made. When a claim accrues can depend on the facts, so count from the earliest date the other side failed to perform.
We help businesses document agreements before problems start, and we evaluate and pursue or defend claims when a handshake deal breaks down. When a dispute reaches court, our civil litigation team handles the case. Call (818) 244-9000 or request a consultation.
Our Glendale team can review what was agreed, the evidence you have and the deadlines that apply.
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