Is an Oral Contract to Sell Mineral Rights Enforceable

When it comes to selling mineral rights, it`s important to have all agreements in writing. However, situations arise where a party may claim that an oral contract was formed. In such cases, the question of whether an oral contract to sell mineral rights is enforceable arises.

It`s important to note that all sales of mineral rights fall under the Statute of Frauds. This law requires that all contracts for the sale of real property or an interest in real property, including mineral rights, must be in writing and signed by both parties. This means that an oral contract for the sale of mineral rights is not enforceable.

In addition to the Statute of Frauds, the Uniform Commercial Code (UCC) also governs sales of goods, which may include minerals. Under the UCC, a contract for the sale of goods worth more than $500 must be in writing to be enforceable.

So, even if parties orally agree to sell mineral rights for less than $500, the contract would still be unenforceable if not in writing.

There are a few exceptions to the requirement of a written contract. If one party partially performs the oral contract, such as making a payment or transferring ownership of the mineral rights, a court may enforce the contract to avoid unjust enrichment for the non-performing party.

Similarly, if one party reasonably relied on the oral agreement to their detriment, such as making improvements to the land in reliance on the sale of mineral rights, a court may enforce the oral contract to prevent injustice.

Overall, it is best to always have a written contract in place when selling mineral rights to ensure enforceability and avoid legal disputes. While oral agreements may seem convenient, the potential risks and uncertainties far outweigh their benefits.