Oral Contracts Disfavored by Ohio Courts
(June 2011) - As recently as November of this past year, Ohio courts have reaffirmed the position that oftentimes oral agreements leave contractors without any grounds for compensation. In Busch Bros. Elevator Co., Inc. v. Unit Building Servs., the First District Court of Appeals dealt with a hotel renovation project and an oral agreement between a contractor and the construction manager that was never put in writing. In this case, the property owner hired a construction manager, who in turn hired Busch Brothers to make elevator repairs. Over the course of a year, Busch Brothers did repair work “at the direction and request” of the construction manager, and was paid upon submission of invoices, per an oral agreement with the construction manager. After five of the invoices went unpaid, Busch Brothers sued.
The Court of Appeals determined that the construction manager did not have to pay the outstanding invoices because Busch Brothers could not prove that a contract ever existed. Without a written contract, Busch Brothers could not show the “particularity” of terms required for a court to recognize or enforce the oral agreement between the parties. Therefore, the Court decided that the construction manager did not have to compensate Busch Brothers for its work.
In making its decision, the Court clearly stated that in the eyes of the law, “oral contracts are disfavored.” It is true that written contracts are preferred—and for good reason. First, when a contract is in writing, it is harder for a court to find that a contract did not legally exist. Second, with a written contract it is easier to prove the specific agreed-upon terms, while an oral contract may fall prey to misinterpretations and he-said-she-said arguments that can be easily avoided when in writing. And perhaps of most practical importance, a written agreement lowers the chance that a contractor will be left unpaid for work already performed. The take-away message? Write it down! The full case opinion for Busch Bros. Elevator Co., Inc. v. Unit Building Servs. can be found at http://www.sconet.state.oh.us/rod/docs/pdf/1/2010/2010-ohio-5320.
