Key Takeaways

  • The statute of frauds requires certain contracts—like those involving land sales, debt guarantees, and long-term agreements—to be in writing to be enforceable.
  • It originates from 17th-century English law and exists in some form in all U.S. states.
  • Contracts related to marriage, real estate, sales over $500, and performance over one year often fall under the statute.
  • Oral agreements may be enforceable under exceptions such as partial performance or promissory estoppel.
  • Courts may accept multiple written communications as sufficient writing under the statute.
  • Specific state statutes may broaden the list of contracts covered and offer unique interpretations.

The statute of frauds involves certain contracts that must be executed in written form. While the statute varies across jurisdictions, these contracts generally involve a written contract when one party is paying another party's debt; during the sale of land; with contracts that take more than one year to complete; and when goods are sold above a certain dollar amount.

Information About Statute of Frauds

All U.S. states have a form of the statute of frauds in place. The purpose of the statute is to prevent nonexistent agreements between two parties being "proved" by fraud or perjury. It is an English law dating back to 1677 created for specific types of contracts in order to serve as a means of defense in breach of contract lawsuits.

The objective of the statute of frauds is to not enforce particular contracts unless there is a written memorandum or note signed by the persons involved with the contract. An authorized representative may also sign the written document.

In a breach of contract action, a defendant may invoke the statute of frauds. They must then establish that the unfulfilled contract is legally unenforceable because of its failure to satisfy the requirements of the statute. If the contract is found to be unenforceable, the defendant is not liable for a breach of contract.

Origins and Purpose of the Statute of Frauds

The statute of frauds traces back to the English Parliament's "An Act for Prevention of Frauds and Perjuries" enacted in 1677. Its primary purpose was to prevent fraudulent claims and perjury in contractual disputes by requiring certain types of agreements to be memorialized in writing. Over time, this legal principle was adopted and adapted across U.S. jurisdictions to ensure that critical contracts are backed by clear, documented evidence, thereby protecting parties from false or exaggerated claims.

Types of Contracts

Several types of contracts should be in writing in case a situation arises where the contract must be enforced. This includes:

  • Contracts involving the sale, lease, or mortgage of real property, such as a parcel of land.
  • When the terms of a contract cannot be performed within one year from the date of the contract's formation.
  • Contracts involving collateral when a promise is made to guaranty the debt of another person.
  • Prenuptial agreements when promises are made regarding a marriage.
  • When goods valued at $500 or more are being sold.
  • Contracts of suretyship.

The categories that the statute apply to have been expanded in some states. In some states, for example, a life insurance contract will not be enforced during the lifetime of the person named in the contract. The statute also applies to contracts that bequeath property by a will and to contracts where an authorized agent can sell real property and be paid a commission.

There are exceptions to the statute of frauds wherein a contract that is considered unenforceable because it is not in written form may be enforced. The first example is considered "partial performance accepted" and involves a situation where a buyer takes partial possession of personal or real property and pays the price attributed to the received property. If the parties involved cannot return to their positions prior to the contract, a court could order that the contract must be performed exactly as stated.

The Uniform Commercial Code supports oral contracts as being enforceable when a seller has accepted payment or when the buyer has accepted delivery of the goods stipulated in the oral contract.

Under the principle of "promissory estoppel," a promisor making a promise to a promisee who then relies on the promise to their detriment may be estopped. This means the promisor cannot deny the existence or the validity of the contract.

Additional Covered Contracts and State Variations

While most states agree on the core categories of contracts that fall under the statute of frauds, some states have expanded the scope. Examples include:

  • Real estate brokerage contracts: Some states require commission agreements between brokers and sellers to be in writing to be enforceable.
  • Life insurance contracts: In certain jurisdictions, a life insurance policy may need to be in writing, especially when it involves third-party beneficiaries.
  • Wills and estate promises: Contracts to leave property through a will may fall under the statute, particularly when involving promises of bequests.
  • Contracts by agents: Agreements granting agents the authority to sell property or bind their principal to certain transactions may also require written documentation.

These variations emphasize the importance of understanding local laws when drafting or relying on oral agreements.

Limitations of the Statute of Frauds

A single written document is not always required for a contract to be enforceable. This would be the situation when several pieces of correspondence shared between the parties state the contract in actual terms that are agreed to by the parties. An example would be when a private individual selling a car corresponds to a buyer through written letters or email to negotiate the price and payment terms. Once agreed to by both parties, the agreement could satisfy the requirements to make it an enforceable contract.

Key Exceptions to the Statute of Frauds

Courts recognize several equitable exceptions to the statute of frauds that allow oral contracts to be enforced in specific circumstances:

  • Partial Performance: If a party has taken significant steps in reliance on an oral agreement—such as making payments, taking possession of property, or beginning work—a court may enforce the agreement.
  • Promissory Estoppel: When one party reasonably relies on a promise and suffers a detriment as a result, courts may estop the promisor from denying the contract.
  • Admissions in Court: If the party being sued admits in testimony that a contract was made, the court may enforce the oral agreement.
  • Specially Manufactured Goods: Under the UCC, contracts for goods that are custom-made and unsuitable for resale may be enforceable even if not in writing.
  • Judicial Exceptions for Unjust Enrichment: Courts may also intervene when failure to enforce the contract would unjustly enrich one party at the expense of another.

These exceptions are meant to balance fairness with the statute's purpose of preventing fraud.

Sufficiency of the Writing

A written contract with the signatures of both parties will suffice as satisfying the requirements of the statute of frauds. Signatures may be located anywhere on the agreement. Initials are also acceptable when there is no signature. The written information needs to contain only the essential terms, which includes the names of the parties, the subject of the contract, quantity, and consideration. 

Modern Forms of Acceptable Writings

With the evolution of communication, courts have accepted various forms of written evidence to satisfy the statute of frauds. This may include:

  • Email chains or digital signatures exchanged between the parties that confirm essential terms.
  • Text messages that clearly indicate agreement on material contract terms.
  • Electronic contracts formed through platforms or apps, especially when both parties demonstrate intent to be bound.

What matters most is that the writing captures the key terms—such as the parties involved, the subject matter, the consideration, and signatures or other acknowledgment of agreement. Courts may also consider a combination of documents that collectively establish a complete agreement.

Frequently Asked Questions

1. What is the statute of frauds?

The statute of frauds is a legal principle that requires certain contracts to be in writing to be legally enforceable, aiming to prevent fraud and misunderstandings.

2. What types of contracts must be in writing under the statute of frauds?

Common examples include contracts involving real estate, agreements not performable within one year, guarantees of another’s debt, and the sale of goods over $500.

3. Can an oral contract ever be enforceable under the statute of frauds?

Yes, courts may enforce oral agreements under exceptions like partial performance, promissory estoppel, or judicial admissions.

4. What must a written contract contain to satisfy the statute of frauds?

It must include the essential terms (such as parties, subject matter, and price), and be signed by the party against whom enforcement is sought.

5. Are emails or text messages valid under the statute of frauds?

Yes, if they clearly demonstrate agreement on material terms and show the intent to be bound, electronic communications may fulfill the writing requirement.

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