Contracts - Statute of Frauds

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					                                           STATUTE OF FRAUDS

Statutes require that certain types of contracts be evidenced by a writing or that they be by written
memoranda of sufficient detail to describe the essential terms. Purpose: To prevent fraud or perjury.

Land: Contracts for the sale of land must be in writing. This usually includes leases over one year. Full or
part performance takes the contract out of the statute. Full or part performance requires possession of
the land and making valuable improvements to the land.

Goods (Old UCC ): All contracts for the sale of goods at or above $500 must be in writing, UCC 2-201.
Also see 9-203, 8-314, 1-206. The requirement is excused by: 1) Acceptance of goods. 2) Part payment.
3) Manufacture of unique goods. 4) Memorandum between merchants. 5) Admissions in judicial

Goods vs. Services: Look to the dominant aspect of the contract for guidance regarding application of

Issue of quantity: Quantity must always be stated, and the contract is enforced as per the quantity
stated in writing, even if it is stated incorrectly.

Marriage: Marriage contracts and prenuptial agreements need to be in writing, but the promise to
marry does not.

Contracts not performed within one year: Contracts that cannot be performed within one year need to
be in writing. Any possibility of performance, no matter how unlikely, will take the contract out of the
statute requirements. The one year is measured from the date of formation, not from the date of
beginning performance. Lifetime contracts: Although always capable of performance within one year,
some states require them to be in writing.

Surety contracts: Promises made directly to a creditor to answer for the debt of another must be in
writing. The promise must regard a contract that existed prior to the surety’s promise. Main purpose
rule: If the promisor’s main purpose in acting as a surety is to secure a benefit to himself, either
personal or pecuniary, the promise is taken out of the statute.

Writing Requirement: Any signed note, including cancellation notices, memos, letters, telegrams, or
even a combination of all of the above, must state: 1) Identity of parties, 2) Subject matter, 3) Terms and
conditions, 4) Consideration, and 5) Signature. Contracts are enforced against signing parties only. A
signature is defined as a name, initials, or even a company logo, and can be handwritten, typed, or
printed. It includes the signatures of authorized agents. Equal dignity: Some states require that an
authorized agent’s agreement be in writing, but this is a minority rule.

Reliance: Under common law, reliance is not a ground for enforcing a contract within the statute unless
the reliance resulted in conferring a benefit (Restatement 2nd Section 139).

Contracts within the Statute: Contracts within the statute, i.e., those that are required to be in writing
but are not, are voidable. The minority view holds such contracts as void.

Quasi contract: Even if the contract is voidable, conferred benefits may be recovered (see Remedies
recovery Section).

Third party issues: The Statute of Frauds as a defense may be asserted only by parties to the contract.

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