Is a Verbal Agreement to Buy a Boat Enforceable in Court?

I entered into a verbal agreement to sell my boat to an individual a couple of months ago. I have always understood that a verbal agreement is enforceable, as long as the terms of the agreement are not in dispute. In this case, the buyer agrees that he offered to buy the boat, and there is no dispute as to the amount of the purchase price. The only area where we have any disagreement is the extent to which I was to pay for repairs to the boat. Now, he refuses to go forward with the purchase. Can I file suit to enforce the agreement?

The general rule for verbal agreements is that they may, in fact, be enforceable under certain circumstances. As our reader suggests, the absence of a written document often complicates the enforcement of a verbal agreement, since many of the details are likely to be forgotten or overlooked. But if the parties agree on significant terms such as price, quantity or the scope of services to be provided, the court may fill in the blanks on a lot of the details.

There are, however, exceptions to the rule.

Certain types of contracts must be in writing under a legal framework known as the “Statute of Frauds.” The name of this legal framework is somewhat misleading, since it is actually a collection of statutes and regulations found in different areas of state law.

For example, in California, section 2201 of the Commercial Code requires any contract for the sale of personal property for more than $500 to be in writing. Similarly, section 1624 of Civil Code requires a contract for the sale of real property to be in writing. Both of these statutes are considered to be under the umbrella of the Statute of Frauds.

A boat will be characterized as personal property, and as such it will be subject to the referenced section of the Commercial Code. But California law takes this a step further for vessel transactions, and section 1135 of the Civil Code specifically requires a contract for the sale of a vessel to be in writing.

Certain exceptions exist to the Statute of Frauds. For example, merchants who deal in particular items of personal property may be subject to different rules. Similarly, a writing may not be required if a buyer and a manufacturer have a course of dealing between them and the product was manufactured specifically for the buyer.

In a vessel purchase transaction, the writing requirement may be waived if the buyer has accepted delivery of the boat and the transaction has otherwise been completed, or if the buyer and seller admit the existence of the verbal agreement during testimony in a lawsuit.

Regardless of whether a verbal agreement for the sale of a boat is enforceable, transactions for the purchase and sale of a yacht may be so complex that it may be impossible to express all of the required terms without a written agreement.

For example, will there be a sea trial and survey? If so, under what circumstances may the buyer reject the boat after these inspections?

How will the parties allocate personal property tax for the year of purchase? Was a deposit paid to the seller? If so, under what circumstances will the deposit be returned to the buyer?

Most important, when, where and how will title to the vessel pass from the seller to the buyer? Transfer of title brings with it a transfer of a risk of loss — and if there is any ambiguity to this question, an insurance claim may be denied.

In a case where essential terms of a contract are not agreed to — whether the agreement is verbal or in writing — a judge may find that the parties did not have a “meeting of the minds,” and as such there was no contract to enforce.

Every transaction, of course, brings with it a unique set of facts — and, therefore, the possibility of different legal conclusions. In the context of a verbal agreement for the sale of a boat, the simple solution is to avoid it at all costs. Ambiguity almost always leads to disputes — and often to litigation.