Oregon Construction Contractors (CCB) Practice Test

What is the status of oral agreements in construction contracts?

1. They are always enforceable

2. They are not legally binding

3. They can only be used for small agreements

4. They are preferred over written agreements

The correct answer is: They are not legally binding

Oral agreements in construction contracts are generally not considered to be legally binding, which aligns with the response provided. While oral agreements can be enforceable in certain circumstances, they are often difficult to prove and enforce in a legal context. This is especially true in the construction industry, where the complexity and scale of projects typically necessitate clear, written contracts to prevent misunderstandings and disputes. In many jurisdictions, including Oregon, the Statute of Frauds requires certain types of contracts to be in writing to be enforceable. This includes contracts related to real estate and contracts that cannot be completed within one year. Because construction contracts often deal with significant amounts of money and complex regulations, relying solely on oral agreements is risky and not advisable. The other responses imply situations that don’t accurately reflect the legal standing of oral agreements in construction. For instance, the suggestion that they are always enforceable disregards the legal challenges associated with proving their terms and existence. Claiming that they can only be used for small agreements underestimates the potential conflict that can arise from any size of oral agreement. Finally, stating that they are preferred over written agreements does not align with the best practices in the industry, where written agreements provide clarity and are the standard approach.