CHAPTER 11

The Statute of Frauds

§11.1 INTRODUCTION

As a general rule, the law gives effect to oral contracts. Although it is almost always a good idea to record a contract (whether in a physical writing or in some other retrievable form) to facilitate proof of the fact and terms of agreement, for many contracts this record is not a prerequisite to validity or enforceability. However, certain types of contract fall outside this general rule and must be written or otherwise recorded and signed to be enforceable. The requirement of a written record for specified types of contracts¹ entered the law of England just over 300 years ago, through a statutory enactment during the reign of King Charles II. As originally conceived and as applied until the advent of electronic media, the statute contemplated that writing and signature would be in tangible form on paper. The rapid advance of communications technology has required the adaptation of “writing” and “signature” to take account of communication by other, particularly electronic, media. This change is reflected both in court opinions that recognize the recording and signature of contracts in retrievable electronic form as the legal equivalent of writing and signature on paper, and in state and federal statutes that make electronic signatures effective. (This is discussed further in section 11.3.) Therefore, unless the context indicates otherwise, assume that the words “written” and “writing” include other means of recording.

  The original motivation for the rule was a concern over fraudulent testimony, hence the original name of the statute, “An Act for Prevention of Fraud and Perjuries,” which came to be shortened to “the statute of frauds.” Its principal function was to ensure that a person could not seek to enforce an obligation of the kind covered by the statute purely on the basis of unreliable and possibly perjured oral testimony, but would have to produce some adequate written record of the contract. American jurisdictions have adopted statutes modeled on the original statute of frauds, covering much the same types of contracts. Over the years, many states have enacted additional statutes requiring writing for further types of contracts. (For example, a writing is required for a contract granting a security interest in personal property under Uniform Commercial Code (UCC) Article 9. Often, consumer protection statutes require a written and signed contract for particular sales of goods and services, and may even specify that the writing must set out the terms governing certain aspects of the transaction.) Therefore, although one usually refers to “the statute of frauds” in the singular, there could be a number of statutes in existence in a jurisdiction, each prescribing writing for a different kind of contract. In this discussion, we are concerned only with the general common law statute of frauds and with that prescribed by UCC Article 2.