Is there a way I can Enforce an Oral Promise to Pay Debts of the Deceased?

Full Question:

My Aunt passed away recently with debts up to ying-yang. Two of her properties was transferred to a person (not family) via 'Quit Claim Deeds' with a verbal agreement that this person will pay her debt. It never happen. Being the trustee in her will, how do I go after this guy who now probably had sold the properties to someone else? Is there anything I can do at all or am I waisting my time?
03/02/2009   |   Category: Contracts ยป Oral   |   State: Arizona   |   #15420

Answer:

The answer will depend on all the facts and circumstances involved, such as the evidence of the agreement (notes, emails, witness testimony, etc.) and the amount of money involved. Typically, oral contracts present evidentiary problems and become a matter of one person's word against the other's. When one of the parties is deceased, evidentiary rules may prohibit testimony of conversation with the deceased. It would then be a matter of subjective determination for the court to determine which party is more credible.

Contracts are agreements that are legally enforceable. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. A contract may be legally defined as a voluntary, legally enforceable, agreement made by persons with the proper capacity. It should include: 1) an offer; 2) an acceptance; and 3) consideration, or an exchange of value.

A contract may be express or implied. A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. A bilateral contract is one in which a promise is exchanged for a promise. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties.

An oral contract is an agreement made with spoken words and either no writing or only partially written. An oral contract may generally be enforced the same as a written agreement. However, it is much more difficult with an oral contract to prove its existence or the terms. Oral contracts also usually have a shorter time period within which a person seeking to enforce their contract right must sue. A written contract generally provides a longer time to sue than for breach of an oral contract.

Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. Each state has developed its own common law of contracts, which consists of a body of jurisprudence developed over time by trial and appellate courts on a case-by-case basis.

An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.

Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds. Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach

Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise.

Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered. Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of ordinary and average person.

In some cases, the court may use its equitable powers to acheive fairness beween the parties and prevent injustice, such as by applying the legal theories of promissory estoppel and detrimental reliance discussed above. In order to prove a person was fraudulently induced to enter a contract, it must be shown the the inducer made a statement that he/she knew was false at the time it was made, and was made to cause another to enter into a contract in reliance on the statement. If the induced party would have entered into the contract without the false promise, this may not apply.

The following is an AZ Rule of Evidence:

Rule 804. Hearsay exceptions; declarant unavailable.

(a) Definition of unavailability. "Unavailability
as a witness" includes situations in which the declarant —

(1) is exempted by ruling of the court on the ground of
privilege from testifying concerning the subject matter of
the declarant's statement; or

(2) persists in refusing to testify concerning the subject
matter of the declarant's statement despite an order of the
court to do so; or

(3) testifies to a lack of memory of the subject matter of
the declarant's statement; or

(4) is unable to be present or to testify at the hearing
because of death or then existing physical or mental illness
or infirmity; or

(5) is absent from the hearing of the proponent of a
statement has been unable to procure his attendance (or in
the case of a hearsay exception under subdivision (b)(2),
(3), or (4), his attendance or testimony) by process or
other reasonable means.

A declarant is not unavailable as a witness if his exemption,
refusal, claim of lack of memory, inability, or absence is
due to the procurement or wrongdoing of the proponent of his
statement for the purpose of preventing the witness from
attending or testifying.

(b) Hearsay exceptions. The following are not
excluded by the hearsay rule if the declarant is unavailable
as a witness:

(1) Former testimony (criminal action or proceeding).
Former testimony in criminal action or proceedings as
provided in Rule 19.3(c), Rules of Criminal Procedure.

(2) Statement under belief of impending death. In
a prosecution for homicide or in a civil action or
proceeding, a statement made by a declarant while believing
that the declarant's death was imminent, concerning the
cause or circumstances of what the declarant believed to be
his impending death.

(3) Statement against interest. A statement which
was at the time of its making so far contrary to the
declarant's pecuniary or proprietary interest, or so far
tended to subject the declarant to civil or criminal
liability, or to render invalid a claim by the declarant
against another, that a reasonable person in the declarant's
position would not have made the statement unless believing
it to be true. A statement tending to expose the declarant
to criminal liability and offered to exculpate the accused
is not admissible unless corroborating circumstances clearly
indicate the trustworthiness of the statement.

(4) Statement of personal or family history.
(A) A statement concerning the declarant's own birth,
adoption, marriage, divorce, legitimacy, relationship by
blood, adoption, or marriage, ancestry, or other similar
fact of personal or family history, even though declarant
had no means of acquiring personal knowledge of the matter
stated; or (B) a statement concerning the foregoing matters,
and death also, of another person, if the declarant was
related to the other by blood, adoption, or marriage or was
so intimately associated with the other's family as to be
likely to have accurate information concerning the matter
declared.

(5) Other exceptions. A statement not specifically
covered by any of the foregoing exceptions but having
equivalent circumstantial guarantees of trustworthiness, if
the court determines that (A) the statement is offered as
evidence of a material fact; (B) the statement is more
probative on the point for which it is offered than any
other evidence which the proponent can procure through
reasonable efforts, and (C) the general purposes of these
rules and the interests of justice will best be served by
admission of the statement into evidence. However, a
statement may not be admitted under this exception unless
the proponent of it makes known to the adverse party
sufficiently in advance of the trial or hearing to provide
the adverse party with a fair opportunity to prepare to meet
it, the proponent's intention to offer the statement and the
particulars of it, including the name and address of the
declarant.