Can I sue for breach of an oral agreement/contract of a loan of $49,000 from April 2007 ?

Asked 5 months ago - Spencer, MA

I loaned my son inlaw $49,000 in 2007, he initially agreed to payback $26,000 upon the completion of a mortgage settlement and the remainder in weekly installments. The $26,000 was never paid and he then agreed to pay back entirely in weekly installments. He stopped autowithdrawal from his paycheck in February 2008 after $2705 was paid. I have the cancelled check and proof that the $2705 was taken from his paycheck and deposited into my account from 6/07 thru 2/08. I have received nothing since 2008.

Attorney answers (5)

  1. Craig J. Tiedemann

    Contributor Level 8

    1

    Lawyer agrees

    Answered . You may face a motion to dismiss under the statute of frauds because the loan was not in writing, but the history of installment payments should help. The problem will be establishing how much you loaned in total (where he has not paid it off in full yet), and the life of the loan (when it was due to be fully paid off). Expect a statute of frauds defense here. Good luck; could go either way.

  2. Peter G. Calabrese

    Pro

    Contributor Level 8

    1

    Lawyer agrees

    Answered . Are Oral Agreements Binding?

    Hello, this situation raises numerous contract law issues but the primary question is whether your oral agreement created a binding/enforceable contract. In Massachusetts, a contract must be in writing if more than 1 year is needed for the parties to fully perform their contractual obligations. Based on the limited facts you have provided your duty was to provide a $49,000 loan and your son’s duty was to repay that loan. If complete repayment of the loan was to occur within one year then an oral agreement is enforceable but conversely, the contract must be in writing (oral agreement unenforceable) if complete repayment of the loan was to occur over more than one year. The duration of the repayment plan is a factual issue.

    Assuming the oral agreement is enforceable you have the following options: (this is not an exhaustive list nor legal advice and it should not be construed as such)

    1. file a complaint for damages ($49k) against your son in a Massachusetts Superior court under breach of contract theory;
    2. after filing suit seek a prejudgment attachment;
    3. place a lien on any/all property owned by your son.

    Please note that the above analysis is not legal advice nor a recommendation to you as to how to proceed; it’s... more
  3. Steven Kelsey Hemingway

    Pro

    Contributor Level 14

    1

    Lawyer agrees

    Answered . I assume the monthly payments were for $300 each. With each passing month, you lose the right to collect on another $300 payment. This is because the statute of limitations for contract actions is 6 years - you have 6 years from the time a payment comes due in which to initiate a lawsuit or you lose the right to sue. The installment nature of the contract helps you, but every month's delay results in another payment that you can no longer collect on.

    You face other issues as the other lawyers have stated, but those may not be insurmountable. The statute of limitations, however, is. Please call an attorney today to initiate suit. This will at least preserve your rights. I would be happy to help, as would several attorneys you can find using the "Find a Lawyer" link above. Let me know if I can help.

  4. Stephen Daniel Karpf

    Contributor Level 13

    Answered . Based on these limited facts, it appears that you and he had a valid agreement to modify the original loan, so you are stuck with the 2008 agreement. Normally, there is a six-year statute of limitations on contracts, so if there was a valid agreement to modify in 2008 and the failure to make payment occurred in February 2008, as long as you file in Court before the six-year anniversary of the failure to make payment, you could proceed on your claim. Given that it is already February 10, 2014, you should proceed immediately - perhaps even filing immediately, without service, just to preserve your claim while you assess your options. You can always dismiss it voluntarily if you can't or don't proceed with the case.

    You might not want to proceed because the problem is also whether you have an enforceable oral contract for the 2008 loan modification. Normally, if the loan 'necessarily' would require longer than a year for repayment, a loan agreement must be in writing because of the Statute of Frauds. This is a defense which your son-in-law has to make; if he fails to do so, that's his problem and you could still win.

    If he does raise this defense, and if the loan could not have been required to have been paid within a year, then you are then forced to respond with an argument that he made misrepresentations to you upon which you relied, to your detriment. To make this argument, you will have to include in your complaint a count which includes these facts. Only a detailed discussion with an attorney will establish whether or not this will be a valid argument - or a proveable one.

    Given the amount of money involved, if there is a possibility of collection, it seems to me that this is well worth pursuing. You should be able to retain an attorney on a contingency basis (a percentage of anything won), although given the possible defenses they may ask you to pay for the cost of filing and (if done) service. Protect your rights (if you can) by immediately filing a complaint, or having a lawyer do it for you, and then assess your options. Whatever you do, do not delay.

    This message does not contain confidential information, is intended for the discussion of abstract legal issues,... more
  5. Mario David Cometti

    Contributor Level 11

    Answered . An oral contract, even for a loan is enforceable. Usually the difficulty is proving the terms and conditions of such contracts. You are one step ahead in that your son-in-law made at least some partial payments. Because of that, it will prove hard for him to argue that there was a loan. Your situation is somewhat complicated in that you modified the terms, without getting anything in exchange. Are there witnesses? Consult an attorney. Your son-in-law may not want to challenge this and may agree to a more formal written down payment plan set forth in a note or perhaps secured by some asset. Let this be a lesson; be leery of people who won't put their obligations to repay a loan in writing.

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