What Classifies a Legally Binding Contract in North Carolina?

by Chris Hamilton; Updated September 26, 2017

A legally binding contract in North Carolina allows a wronged party to enforce the terms of a broken contract in court. A contract can take either verbal (oral) or written form and must be a promise, agreement, memorandum of understanding, lease, and settlement between two or more parties who agree to perform services for one another. Legally binding contracts only last as long as state time limitations before which a wronged party must take an action to enforce a contract.

Components

Legally binding contracts in the state must contain three components. One party must offer to provide or not provide a product, service, or action to another party. The other party must agree to exchange with the first party something of value in return. Both parties must reach a reasonably fair agreement in order for a North Carolina court to enforce the contract so that one party does not agree to an abusive contract.

Considerations

While verbal and written contracts usually receive equal treatment under North Carolina law, certain types of verbal agreements do not hold legal standing in the state, including contracts for the sale and lease of land, commercial loan agreements worth more than $50,000, promises to pay off debt already discharged by bankruptcy, sales of goods worth $500 or more, and agreements to pay off the debt of another party, according to Chapter 22 of the North Carolina Code.

Enforcement

Just because the state classifies a contract as valid does not mean that a party can successfully take action to enforce the agreement in court. A party must have evidence of a verbal contract, including witnesses, records of telephone calls, or an unofficial paper trail, such as emails or letters, in order to help prove they were party to a contract. Contracts signed under duress are not legally binding in North Carolina.

Prohibitions

Whether verbal or written, a legally binding contract in North Carolina cannot contain any clauses that disagree with laws of the state. The state prohibits arbitration clauses that limit a parties’ ability to sue for a broken contract and waivers that protect either party from liability or increases their liability to more than the limits established by the Tort Claims Act. Parties to a contract cannot agree to shorten or lengthen the statute of limitations on an agreement contrary to the limits provided by state law.

About the Author

Chris Hamilton has been a writer since 2005, specializing in business and legal topics. He contributes to various websites and holds a Bachelor of Science in biology from Virginia Tech.