Can I sue a friend to recover my money?
Dear Mirror Lawyer, a few months ago, I lent a significant amount of money to a close friend who was in desperate need. We had a verbal agreement that he would pay me back within three months.
However, now that the time has come for him to repay the loan, he is refusing to do so. He claims that, since we are friends and had only a verbal agreement, it was not a binding contract.
I am at a loss. Can I sue a friend to recover my money, even though he claims the agreement we had was not in writing? The situation is straining our friendship, and I am worried about both my financial and personal losses.
Do verbal agreements hold any legal weight? What are my options to recover the money if my friend continues to deny the obligation to repay me? How should I proceed to protect my interests without causing further damage to our friendship?
Your guidance would be immensely helpful in resolving this difficult situation.
Samuel Simpson, Cape Coast.
Dear Samuel, the law does recognise verbal agreements under certain conditions, and it is important to understand the elements that constitute a valid and enforceable contract.
Contracts are formed through a process in which one party proposes terms (an offer) and the other party accepts (acceptance). In your case, you offered to lend money to your friend, and he accepted the loan with a promise to repay it. This exchange of promises constitutes the agreement.
Both parties must intend for their agreement to have legal consequences. In domestic or social settings, such as between friends, this intention can sometimes be presumed absent. However, if you can demonstrate that both you and your friend intended for the loan to be repaid, this element can be satisfied.
Both parties must have the legal capacity to enter a contract. This typically includes being of sound mind and not being a minor. Assuming you and your friend both meet these criteria, this element should be straightforward.
The promise to repay the loan must be supported by consideration, meaning something of value must be exchanged. In this case, the money you lent serves as consideration for your friend's promise to repay it.
While written agreements provide clearer evidence, verbal agreements can also be binding if the above elements are present. In your situation, if you can demonstrate that there was a clear offer, acceptance, intention to create legal relations, and consideration, you likely have a valid contract.
Based on the facts you have provided, it appears, though rebuttable, that your agreement was made in a domestic setting.
Agreements made in a domestic or social setting, like those between friends, are generally presumed not to create legal obligations. However, courts may infer an intention to create legal relations if the agreement has a commercial flavour.
For instance, in the English case of Simpkins vs. Pays, the court inferred a mutual intention to create legal relations despite the domestic setting, as the agreement involved a joint enterprise with an expectation of sharing any prize won.
In the scenario you put up, the time frame agreed by you and your friend for loan repayment implies a serious promise that the parties would reasonably have expected to be honoured. With this expectation comes a rebuttal of the presumption that the parties intended to sue in the event of a contractual breach.
The implication here is that, provided you can demonstrate that there was an agreement on the terms you have stated, you have a viable cause of action to recover your money in a suit at the law courts.
If you value your relationship with your friend and want to preserve it, you can look for a respected person known to both of you to intervene and mediate the dispute, to help you find a mutually satisfactory outcome.
I hope this explanation helps you understand your rights and the steps you can take to resolve this matter.
