Most business owners in Las Vegas are probably aware that two parties do not legally need to have a written document to have a binding contract. In fact, an oral contract, or an agreement made by spoken words only, can be valid and enforceable in court. However, in reality such “handshake deals” can be difficult to enforce since it can come down to one side’s word against the other. In almost any business deal, a written contract is one of the best possible ways to protect yourself from breach of contract claims later.

A nationwide racetrack business is engaged in a breach of contract dispute with a county in another state. The company, which owns a racetrack in Nevada among other places, says that the county reneged on an oral contract to provide tax incentives in exchange for the company adding improvements to its Charlotte Motor Speedway and construct a drag strip as well.

The plaintiff, SMI, says that the county agreed in 2007 to provide it $80 million in tax breaks within six years not to move the speedway, add improvements to it and build a $60 million drag strip 20 miles outside of town. Apparently in reliance on that oral contract, SMI went ahead with the projects. The day after the drag strip opened in 2008, the county delivered a written contract that stated the tax breaks would come in form of property tax relief as the properties increase in value.

SMI rejected those terms, calling them an impermissible amendment of the oral contract. In response, the county said there was an “agreement to agree,” not a contract prior to 2008. SMI filed suit but the litigation was dismissed in 2012. But SMI appealed, and the appellate court is scheduled to consider the appeal on April 9.

This case shows how the terms of an oral contract can be interpreted two different ways by the parties involved without a written document to make the nature of the agreement clear.

Source: Auburnpub.com, “Charlotte Motor Speedway sues over $80M deal,” April 8, 2013