Litigating any form of unwritten promise is always a challenge. In an age of ubiquitous electronic communications, judges and juries have more reason than ever to be skeptical of alleged oral agreements.
Sometimes, however, a litigant has no other option than to pursue a claim based on an unwritten agreement. In the business context, this can often occur where one party verbally agrees to be responsible for the debt of another. A typical example arises where a business has a written contract with an entity that is not making the required payments. When the business presses the issue, an individual affiliated with the entity, such as a shareholder or member, verbally agrees to pay the business instead in order to induce the business to continue performing under the contract. Thereafter, both the individual and the entity fail to make the payments, but by that time, the entity has frequently become insolvent, bankrupt or otherwise judgment-proof, leaving the promisee with only the third-party guarantor or surety as a potential source of recovery.
