Mullins, SC asked in Civil Litigation and Contracts for North Carolina

Q: What are the laws regarding verbal loan agreements in North carolina?

If someone makes an agreement to pay monthly payments on a loan from someone else and then refuses to pay how is this legally binding if the agreement was oral?

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1 Lawyer Answer
Nicholas Arthur Matlach
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  • Providence, RI
  • Licensed in North Carolina

A: It's true that oral loan agreements are harder to enforce than written ones. Here's why:

- Proof of Agreement: The main issue is proving that an agreement actually existed and what terms both parties agreed upon. It often becomes a "he said, she said" situation without written evidence.

- Statute of Frauds: Certain types of contracts, including some loan agreements, are required to be in writing under the law for enforceability. This is known as the Statute of Frauds.

However, oral agreements might still be enforceable under specific circumstances:

- Partial Performance: If the borrower already made some payments, this could demonstrate that a loan agreement was in place.

- Promissory Estoppel: If a lender relied on the borrower's promise to repay and suffered detriment as a result, a court might enforce the agreement under this principle.

- Witnesses: Having witnesses to the verbal agreement can significantly strengthen the lender's case.

- Other Evidence: Any form of communication (texts, emails, etc.) referencing the loan terms can bolster the lender's claim.

You may be able to sue in small claims court or talk with a lawyer if your case doesn't qualify for small claims. Ultimately, it will come down to who is more believable in front of a trier of fact (Judge or jury).

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