To continue with the story, and this part gets us into “the law”…. so grab a coffee…..
Firstly, a verbal agreement is still agreement. It is valid. The difficulty is the proof. Invariably you end up with a “he said – she said” type argument.
Historically, way back in merry old England, it was realized that someone could cause a lot of grief by simply alleging a verbal agreement in an attempt to defraud someone. So, over 300 years ago, England passed what is called the Statute of Frauds. For all intents and purposes, this statute said that for certain types of agreements (either dealing with land, or a contract of guaranty) they must be in writing and signed, otherwise you are not permitted to sue on it.
This does not invalidate the contract. It simply acts as a bar from suing (effectively the same thing in many cases). It is similar in concept to a limitation period. It matters not if the complaint is true, there is a statutory bar from being able to pursue it in court.
Most (if not all) provinces in Canada has a Statute of Frauds. Ontario is no exception.
As with all laws, there are exceptions to the rule. With respect to this type of issue, and again going back 300 years, the courts recognized that in certain circumstances, instead of protecting people, the Statute could itself be used to defraud people, by entering into such a verbal contract (say, to sell land), take the money, but then defeat a claim by saying “aha, it is not in writing.” So the doctrine of “Part Performance” was created.
Part Performance is essentially an examination of the conduct of the parties, to determine if they took any actions consistent with the alleged agreement. Actions can include payment of money. Of course, there are all sorts of reasons for the payment of money, so the doctrine goes on to require that the action be unequivocally referable to, if not the precise agreement alleged, at least the type of agreement alleged.
So, on that basis, and rather than wait for a trial, I recommended, and the client agreed, that we attempt to have the action summarily dismissed on a motion under our rules of procedure for “summary judgment”.
More to follow……..