The Statute of Frauds

  The basic rule of the statute of frauds (referred to from now on as “the statute”) is that a contract within its scope may not be enforced unless a memorandum of it is written and signed by the party to be charged. This gives rise to a few initial observations: First, the statute does not require the entire contract to be written, but only a memorandum of it. The degree to which a writing must set out the detail and content of the contract to qualify as a sufficient memorandum is discussed below. Second, only the party who is to be charged, that is, against whom enforcement is sought, needs to have signed it. The signature of the other party is not needed. The question of what constitutes a signature is discussed below. Third, the consequence of noncompliance is usually unenforceability, not invalidity. This distinction is explained more fully in section 11.5.

  The statute is intended to prevent a person from enforcing a falsely alleged contract through perjured testimony. However, when a contract was really made orally, the statute can equally be used by the party seeking to evade it. For this reason, there is some concern that the benefits of the statute are outweighed by its potential for abuse. It may be better policy to have no requirement of writing and to allow the factfinder to evaluate the credibility of the oral evidence. These considerations led to the repeal of the statute of frauds in England some time ago, but it continues to survive in U.S. jurisdictions. The principal focus of the courts has been on making it more flexible to better ensure that it efficiently achieves its purpose while cutting down on the opportunities for abuse. Sometimes this has been done by legislation (as happened when the statute of frauds relating to sales of goods was given statutory form in UCC §2.201) but more often, reforms develop in the process of judicial application of the original statutory provisions. Restatement, Second, §§110-137 seek to reflect contemporary judicial thinking on the statute.

  To determine whether problems of enforcement exist under the statute, it is useful to ask three questions in the order represented in Diagram 11A.