Statutes of Frauds
The Statute of Frauds is derived from common law but can be modified by state statutes. The general rule is that certain types of contracts must be in written and signed form with a sufficient amount of content that is evidence of the contract.
Uniform Electronic Transactions Act (UETA) – The UETA give full effect to electronic forms of contracts and considers form or electronic record sufficient to fulfill the written requirement.
Contracts that are commonly covered by The Statute of Frauds are:
Suretyship Provisions – Suretyship is the promise to pay another individual or organization’s debt. The promise must be Collateral for the agreement and the promisor must be secondarily liable, not primarily. If the promisor is making the promise in exchange for an economic benefit, then the promise is not covered. Co-signing a loan would be an example of a Suretyship Provision.
Executor-Administrator Provision – Promises to answer duties of decedents.
Marriage Provision – Considerations of marriage are such as a prenuptial agreement must be in written form.
Land Contract Provision – Contracts to sell Real Property or contracts with considerations that transfer rights, privileges or uses (rental payments, oil payments, farming etc…) of the land are covered by the Statute of Frauds and therefore must be in written from. There are some exceptions to Land Contracts. If the seller performs partial where the buyer is reliant on the performance then an oral contract may be enforced. This is because each performs acts as a contract that is not covered by the Statute of Frauds. As a result only the executed parts of the contract can be recovered. If the seller conveys the property then an oral contract may be enforced.
One-Year Provision – The Statute of Frauds applies to contracts with provisions stating that the contract cannot be performed within one year.
Possibility Test – If it is possible, even unlikely possible for the contract to be performed within one year the it is not covered by the Statute of Frauds.
Computation of Time – The year starts when to contract is made and not when the performance of the contract starts.
Full Performance by One Party – If one party fully performs his or her promises then the other party’s promises may be enforce even if they were made orally.
Sales of Goods (UCC) – Contracts or the sale of goods $500 or more are covered by The Statute of Frauds as recommended by the UCC. Some exceptions are as follows:
Admission – If a person admits in pleadings, testimony or otherwise in court then his or her admission makes the contract enforceable.
Specially Manufactured Goods – Once the seller begins producing the specially manufactured goods the contract is enforceable.
Delivery or Payment and Acceptance – If a payment has been made and accepted then the contract is enforceable only for the amount paid for.
Modification or Rescission of Contracts within the Statute of Frauds – Contracts may not be orally modified if the they are contracts that are covered by The Statute of Frauds.
Methods of Compliance - General Contract Law – The writing must specify who the parties involved in the contract are, the elements of the contract,(considerations, time of the contract, price, quantity etc…) and the contract must be signed by the party who it is being enforced against.
Effect of Noncompliance
Oral Contracts within the Statute of Frauds is unenforceable unless there is an exception
Restitution is available for quasi-contracts where a benefit has been exchange in reliance on an oral contract.
Promissory Estoppel – In order to preserve justice a contract can be enforced as would be the case in a promissory estoppel where a party justifiable and reasonably relied on a promise.
