Statute of Frauds
McGraw-Hill/Irwin
©2008 The McGraw-Hill Companies, All Rights Reserved
Objectives
Chapter Objectives:
• Use vocabulary regarding the Statute of Frauds and
its application properly
• Discuss the five types of agreements that must be in
writing to comply with the statute
• Determine whether the statute applies to a given set
of facts
• Analyze the extent of partial performance to
determine whether it will take the oral agreement out
from under the requirements of the statute
6-2
Statute of Frauds
Five categories of contracts that fall under the
Statute of Frauds:
1. The transfer of real property interests
6-3
Statute of Frauds
Five categories of contracts that fall under the
Statute of Frauds:
2. Contracts that are not performable
within one year
6-4
Statute of Frauds
Five categories of contracts that fall under the
Statute of Frauds:
3. Contracts in consideration of marriage
6-5
Statute of Frauds
Five categories of contracts that fall under the
Statute of Frauds:
4. Sureties and guarantees (answering
the debt of another)
6-6
Statute of Frauds
Five categories of contracts that fall under the
Statute of Frauds:
5. Uniform Commercial Code provisions
regarding the sale of goods valued over
$500.00
6-7
Statute of Frauds
• The Statute of Frauds is the courts’ attempt to
deny enforcement of dubious claims
• However, strict enforcement of the Statute of
Frauds could deny recovery for real claims and
cause injustice as against an innocent party
6-8
Writing Requirement
• Parties can generally choose terms and
conditions they wish under the freedom of
contract theory, the nature of contract law
and its desire for certainty takes the lead in
certain types of contracts
• Written form is more certain and concrete
than verbal form. Certain types of contracts
require that there be proof in writing in order
to be enforced through the court
6-9
Writing Requirement
An oral contract concerning these
enumerated types of contracts will not be
enforced in a court of law.
6-10
Writing Requirement
Note of Caution: Paralegals must do
their research!
– Each state has its own statutory
provisions enumerating requirements
for each type of contract that falls
under the Statute of Frauds
6-11
Writing Requirement
Note of Caution: Paralegals must do
their research!
– It must be determined whether the
contract falls within the Statute of
Frauds and, if the writing satisfies the
requirements of the Statute of Frauds
6-12
Writing Requirement
“Writing to Satisfy the Statute of Frauds”
A document or compilation of documents
containing the essential terms of the
agreement
6-13
Writing Requirement
•
The writing must be signed by the party
to be charged. This means that the
writing(s) must be signed or otherwise
authenticated by the person against whom
enforcement is sought
6-14
Types of Contracts
• Transfer of Real Property Interests
– The actual sale of a piece of real estate - in
order to purchase a house or parcel of
land, the contract must be in writing
– “interests in real property” that qualify for
inclusion under the Statute of Frauds are
mortgages, leases for more than one year,
transfers of shares in real estate
cooperatives, easements, liens on property
as security, and the like
6-15
Types of Contracts
• Contracts That Are Not Performable within
One Year
– Statute of Frauds requires contracts to be
in writing where the performance under
the contract could not take place in under
one year
– the amount of time that lapses between
performance and the acceptance of the
contract determines whether the contract
falls under the Statute of Frauds, not how
long the actual performance takes
6-16
Types of Contracts
•
The tricky element to this “performance
within one year” requirement is that the
drafter or reviewer must bear in mind not
what actually does happen in the
circumstance, but what could happen
6-17
Types of Contracts
• Contracts in Consideration of Marriage
− Prenuptial and Antenuptial Agreements
– The Statute of Frauds does not apply to
the mutual promise to actually marry the
other person, but it does apply to all
other arrangements and/or conditions
attached to that agreement
6-18
Types of Contracts
• Sureties and Guarantees (Answering the Debt
of Another)
− Surety
A party who assumes primary liability for
the payment of another’s debt
− Guarantor
A party who assumes secondary liability
for the payment of another’s debt. The
guarantor is liable to the creditor only if
the original debtor does not make
payment
6-19
Types of Contracts
• The Sale of Goods Valued over $500.00
(Uniform Commercial Code)
– The UCC requires that a contract for the
sale of goods for a price over $500.00 is
required to be in some written form
– Price is stressed because there has been
a change away from value as that is a
more indefinite term
6-20
Types of Contracts
• Price
The monetary cost assigned to a
transaction by the parties
• Value
The worth of the goods or services in
the transaction as determined by an
objective outside standard
6-21
Partial Performance
• Partial Performance Doctrine
The court’s determination that a party’s
actions taken in reliance on the oral
agreement “substitutes” for the writing
and takes the transaction out of the scope
of the Statute of Frauds and, thus, can be
enforced
6-22
Summary
Contract law’s desire for certainty has
placed a writing requirement on certain
types of contracts to ensure against fraud.
These include:
1. The transfer of real property interests
2. Contracts that are not performable within
one year
3. Contracts in consideration of marriage
4. Sureties and guarantees (answering the
debt of another)
5. Uniform Commercial Code provisions
regarding the sale of goods over $500.00
6-23
Summary
• Even if the Statute of Frauds does
apply and the writing requirement
is not met, the court may still give
the aggrieved party who is not at
fault a remedy to prevent injustice if
that party has partially performed
on the agreement
6-24