Chapter 9

STATUTE OF FRAUDS

ChapterScope

This chapter covers the “Statute of Frauds,” which in every state provides that certain types of contracts must be in writing in order to be enforceable.

• Five main types: Here are the five important types of contracts that fall under the Statute of Frauds, and that must therefore ordinarily be in writing:
  • Suretyship agreement. A guaranty, i.e., a promise to pay the legally enforceable debt of another, is normally within the Statute of Frauds, and must therefore be in writing.
  • Marriage provision. A promise for which the consideration is marriage (or a promise of marriage) must be in writing.
  • Land contract. A promise to transfer an interest in land must be in writing. (Not just sales, but other transfers of an interest in land, such as mortgages and leases, are covered.)
  • One-year provision. A contract which cannot possibly be fully performed within a year of its making must be in writing.
    • Mere possibility enough: However, if there is any possibility, no matter how small, that the contract can be completed in a year, it need not be in writing. (Example: An employment contract that is to last for the rest of the employee’s lifetime does not have to be in writing, because it is possible that the person will die within one year after the contract is made.)
  • Sale of goods: A contract for the sale of goods for a price of $500 or more must normally be in writing.
• Elements of the writing: To satisfy the Statute of Frauds, there must be a signed writing. The writing must normally (1) reasonably identify the subject of the contract; (2) indicate that a contract has been made between the parties; (3) state with reasonable certainty the essential terms of the contract; and (4) be signed “by or on behalf of the party to be charged.”