Statute Of Frauds

Statute of Frauds in the United States

Statute Of Frauds Definition

The name commonly given to St. 29 Car. II. c. 3, entitled, “An Act for the Prevention of Frauds and Perjuries”; and to statutes of the various states patterned thereon, and substantially to the same effect. These statutes differ in detail, but generally provide that no action shall be brought on certain classes of contract unless some memorandum thereof be in writing, and signed by the party to be charged. (This definition of Statute of Frauds is based on The Cyclopedic Law Dictionary). For a meaning of it, read Statute Of Frauds in the Legal Dictionary here.

Practical Information

An ordinance, enacted with variations in all the states, providing that certain contracts cannot be enforced unless they are in writing signed by the party against whom the contract is sought to be enforced. The writing need not be a formal document signed by both parties written note or memorandum of the transaction signed by the party to be bound by the agreement is sufficient. The laws in the various states are fairly uniform in requiring the following contracts to be in writing:

  • A special promise to be responsible for the debt, default or miscarriage of a third person.
  • An agreement by an executor or administrator to become liable out of his or her own property for the debts of the estate.
  • A contract, the consideration for which is marriage. Engagement contracts are not included.
  • Contracts for the sale of real estate or any interest therein.
  • Contracts that cannot be performed within one year.
  • Contracts involving the sale of personal property in excess of a certain amount (which varies in the different states), when no part of the property has been delivered and no part of the purchase price has been paid.

In addition, many states require the following contracts to be in writing:

  • An agreement to bequeath property or to make any provision for someone by will.
  • An agreement to pay upon attaining legal majority a debt contracted during infancy.
  • The creation of a trust.
  • The promise to pay a debt that has been outlawed by the statute of limitations (in U.S. law) or barred by bankruptcy (in U.S. law).
  • An assignment of wages to be earned in the future.
  • A mortgage of personal property.

(Revised by Ann De Vries, 1982)

More

• Reasons for requiring writing ? Shows whether someone is lying or not
? Similar reasons to consideration–evidentiary, cautionary, channeling
? Makes intent clearer
? Encourages specificity
? Historical record
? ‘Unfixity costs’–costs born because over time, people’s memory of exactly the same thing will differ

• Negatives ? Lack of writing can allow people who intended to be bound at time of contract to get out of it

• England has done away with Statute of Frauds–is it really necessary for us?
• Differences between California and Connecticut Statutes: ? California Statute probably dominated by interests of Lending Institutions
? Connecticut more traditional contract basis

• Particular strictness with respect to brokerage agreements ? High potential for dishonesty
? Disparity in information

Why the one-year clause? ? Risks of unfixity

• Significance–we expect more significant contracts to be put in writing. Thus, we are more comfortable imposing statute of frauds on significant contracts, since we will be more suspicious of them being binding when they aren’t in writing.
• Lifetime employment cases ? Because lifetime employment contract could be ‘completed’ in less than one year, courts often don’t require such a contract to be in writing–counterintuitive because usually a ‘lifetime’ contract will be longer than a fixed employment contract, which does need to be in writing.

• Recording Issues ? How much of contract has to be in writing for it to be valid under statute of frauds?
? Who has to sign for contract to be valid?
? What does it mean to ‘sign’ a contract?
? Does everything need to be in one writing?

• Answer to these questions is a ‘muddle’, but:
• Key provisions needs to be in writing.
• Fields where full provisions would need to be in writing: surety, real estate.
• Other fields: would just need evidence that agreement exists, in writing.
• Mental leap: if you prove that you have satisfied statute of frauds, you have proved that agreement exists. But in fact satisfying statute of frauds only means you have passed an initial bar.

UCC 2-201: Formal Requirements; Statute of Frauds.

1. Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
• Various standards are used as to ‘sign’. Sometimes just written signature; sometimes notarized signature; in the case of securities transactions, often bank seal is required.
• Exception in UCC for transactions between merchants: Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.
• Frequent example, where grain dealer contacts a number of farmers for price on grain, grain dealer sends in order, then farmer refuses to perform (because grain prices have gone up). Question then becomes whether farmer is a merchant.

The Statute of Frauds Explained

References

See Also

  • Contracts

Resources

See Also

Further Reading

Further Reading (Articles)

Promoting or Frustrating the Statute of Frauds? Implications from Holman V. Childersburg Bancorporation, Inc, Jones Law Review; January 1, 2004; Franks, Johnni L.

When Actions Speak Louder Than Words: The Case for a Quasi-Estopped Exception to the Statute of Frauds, The Review of Litigation; January 1, 2003; Stilwell, James H.

Statute of Frauds Applied to Purported Agreement to Extend Loan’s Maturity, The RMA Journal; April 1, 2010; Weissman, Michael L.

THE BRIBERY STATUTE: A NEW WEAPON AGAINST MEDICARE FRAUD.(Fischer V. United States case), Healthcare Financial Management; March 1, 2001; COZORT, LARRY A.

Some Exceptions to the Suretyship Statute of Frauds: A Tale of Two Courts, St. John’s Law Review; April 1, 2005; Gegan, Bernard E.

COMMISSION AMENDS STATUTE OF ANTI-FRAUD OFFICE. European Report; July 3, 1999

Kentucky Court of Appeals says statute of frauds bars paralegal’s damage claim, Lawyers USA; April 23, 2007

The Statute of Frauds and business norms: a testable game-theoretic model.(Symposium: Law, Economics, & Norms), University of Pennsylvania Law Review; May 1, 1996; Johnston, Jason Scott

Guarantee By Email Exchange.(Golden Ocean Group Limited v Salgaocar Mining Industries PVT Ltd.)(United Kingdom. Statute of Frauds Act 1677), Mondaq Business Briefing; May 3, 2012

Contracts: Keeping Formalities To A Minimum.(Statute of Frauds Act 1677)(Case overview), Mondaq Business Briefing; September 8, 2011; Kilbee, Mike

MO: was association’s oral agreement binding?: did statute of frauds apply to oral agreement?(Legal Case Briefs for Nurses), Nursing Law’s Regan Report; February 1, 2004; Tammelleo, A. David

Oral Leases And Agreements To Lease: The ADT Sidelines The Statute Of Frauds. Mondaq Business Briefing; January 14, 2008

Emails Satisfy “Signed Writing” Requirement Of New York Statute Of Frauds And Employment Agreement. Mondaq Business Briefing; June 30, 2008

TMBA Pushes Case In California on Anti-Fraud Statutes. The Bond Buyer; November 24, 1998

U.S. Supreme Court Curtails Federal “Honest Services” Fraud Statute.(Jeffrey Skilling from Enron v. United States)(John McNally v. United States)(Case overview), Mondaq Business Briefing; June 29, 2010

Comparison of Consumer Fraud Statutes Across the Fifty States[dagger], FDCC Quarterly; April 1, 2005; Brown, Alan S Hepler, Larry E

Constitutionality of Florida’s Patient Brokering Statute and Medicaid Provider Fraud Statute in Doubt. Mondaq Business Briefing; March 11, 2005

Fraud Enforcement And Recovery Act Of 2009: Congress Amends Money Laundering And Criminal Fraud Statutes To Expand Their Scope And Penalties. Mondaq Business Briefing; May 28, 2009

Statute use questioned in fraud case, Deseret News (Salt Lake City); April 25, 2008; Geoffrey Fattah Deseret News

The Supreme Court Limits Applicability of Honest-Services Fraud Statute to Bribery and Kickback Schemes.(Case overview), Mondaq Business Briefing; July 21, 2010


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