Oral Contracts. Robert Pinto, doing business as Pinto Associates, hired Richard MacDonald as an independent contractor in March 1992. The parties orally agreed on the terms of employment, including payment to MacDonald of a share of the company's

Question

income, but they did not put anything in writing. In March 1995, MacDonald quit. Pinto then told MacDonald that he was entitled to $9,602.17—25 percent of the difference between the accounts receivable and the accounts payable as of MacDonald's last day. MacDonald disagreed and demanded more than $83,500—25 percent of the revenue from all invoices, less the cost of materials and outside processing, for each of the years that he worked for Pinto. Pinto refused. MacDonald filed a suit in a Connecticut state court against Pinto, alleging breach of contract. In Pinto's response and at the trial, he testified that the parties had an oral contract under which MacDonald was entitled to 25 percent of the difference between accounts receivable and payable as of the date of MacDonald's termination. Did the parties have an enforceable contract? What should the court rule, and why?

Answer 1

Oral contracts
The court concluded that MacDonald failed to prove the existence of an oral contract, and ruled in Pinto's favor. MacDonald appealed to a state intermediate appellate court, which reversed the lower court's judgment and remanded the case for a new trial. The appellate court explained, "In the present case, the plaintiff did not have to prove the existence of an oral contract because the defendant repeatedly admitted to its existence in his answer and at trial. The court therefore improperly determined that the plaintiff did not meet his burden of proving the existence of the oral contract. The pleadings and the parties' testimony establish that at the time the parties formed the oral contract, there was a meeting of the minds. Only now, subsequent to contract formation, do the parties' recollections regarding the terms of their contract differ. Therefore, on remand, the court must assess the credibility of the witnesses in determining the terms of the parties' contractual commitments" and "determine the amount of damages to which the plaintiff is entitled."