The Statute of Frauds

§11.2.1 Contracts for the Sale of Land or an Interest in Land

Like many rules derived from older English law, this rule reflects the importance of land as the principal means of wealth in English society at the time. The statute applies not only to a contract to sell land, but also to any other contract under which land is disposed of, as well as a transfer of an interest in land short of full ownership, such as the grant or transfer of an easement or mortgage. A lease is also an interest in land. The statute of frauds usually applies to long-term leases, but commonly is not applicable to short-term leases.

§11.2.2 Contracts That Cannot Be Performed Within a Year

Any contract, irrespective of its subject matter, must comply with the statute if it cannot be performed within a year of its execution. Note that the rule is not confined to contracts in which the performance itself will take over a year, but includes any contract—however short the period of performance may be—in which the performance will not be completed within a year of contracting. Therefore, if on July 1, 2012, a customer makes a contract with a popular resort to rent a room for July 3 and 4, 2013, the contract falls within the statute, even though the performance will last only two days.

  The idea behind the one-year rule is probably to ensure that longer-term contracts are recorded. In part, this reflects the concern that parties cannot be expected to remember unrecorded terms as time passes, but it could also be motivated by the expectation that a long-term contract may involve greater economic value. Commentators have pointed out that if the rule is motivated by this goal, it does not achieve it very effectively because the one-year period does not relate to the length of performance but the period between the making of the contract and the end of performance. Therefore, the rule just as much governs a short, inexpensive transaction (such as the hotel booking used in this illustration) as a long, expensive one. Whatever the thinking behind the rule, it is obviously arbitrary and if rigidly applied, could result in absurd distinctions. For example, if an employment contract is entered into on Monday, for a year’s employment beginning that day, the statute is not implicated. However, if the employment period is to begin on Tuesday, the statute applies.