Is a spoken (verbal) agreement binding? Can it be upheld by law when no contract has been signed in a private sale?
Suppose that you, a private person buy a car from another private person and come to realize that it does not meet your expectations or is faulty in some way and you decide to return it to the seller, then what are your rights in such circumstances?
Breach of contract
A general principle of contract law is pacta sunt servanda, which means that agreements must be kept, whether oral or written. When a party does not fulfill its part of the agreement, it constitutes a breach of contract. Not paying back the agreed amount is a material breach of contract and the other party can in such cases claim damages for the damage he suffered.
The Purchase Act
When you entered into an agreement with a private person, the Purchase Act, KöpL, is applicable (§ 1 KöpL). The law is dispositive, which means that the agreement applies before the provisions of the law (§ 3 KöpL). When the item in question does not match the characteristics etc. that follow from the agreement, a fault may exist if it deviates from what the buyer could reasonably have assumed, i.e. the goods must not deviate from what is reasonable (Section 17 KöpL). If the parties have not agreed on the nature of the matter, you can be guided by the points in the above paragraph, e.g. that the thing must be suitable for the purpose for which goods of the same kinds of good(s) are generally used. The seller also has a marketing responsibility, which means that the marketing must correspond with the goods (§ 18 KöpL). Selling something in "as is condition" can be said to be a limitation of legal responsibility, but cannot be considered approved if it concerns failure to inform the buyer of serious defects if the item is in a significantly worse condition than the buyer could have assumed and if the seller has provided information about the goods that do not match (§ 19 KöpL). The buyer may not point out errors that he/she must have known at the time of the purchase, and if the buyer has examined the goods or failed to follow the seller's request to examine them, the buyer may not invoke such errors he/she should have noticed during the examination (Section 20 KöpL).
The penalties that can be actualized when the error is not due to the buyer are to demand rectification, re-delivery, price reduction or cancel the purchase, as well as demand damages (§ 30 KöpL).
Cancelling the contract
You have a right to e.g. cancel the purchase and get your payment refunded. When the seller does not fulfill his obligation according to the agreement to give you a refund, it constitutes a breach of contract and you can claim damages for the damage you suffered as a result.
The difficult thing here is that your agreement is verbal and it will be difficult to prove what you have agreed on. Unfortunately, there is probably not much that can be done about this. It is always possible to take it to court to decide, but since there does not seem to be any proof of your agreement, it will be word for word and can be difficult to reason, unless you can present some other form of evidence that proves that he breached your agreement to repay you. The court also charges an application fee and the person who loses the case may have to pay the other person's legal costs.
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