What is the Statute of Frauds?

When handling a contract dispute, especially when it comes to an oral agreement, one may hear the term “statute of frauds” utilized. This does not describe the commission of an actual fraud, however rather, whether the contract had to remain in composing or not. What is the statute of frauds and when does it apply?

As pointed out, the statute of frauds refers to the requirement that specific sort of agreements be “memorialized” (i.e., written down) in a signed document that plainly details the agreement. Generally, the statute of frauds requires a signed writing for marital relationship contracts, prenuptial arrangements, contracts that can not be completely performed within one year, contracts moving rights to land, agreements by the executor of a will to pay a financial obligation with his/her own cash, contracts for the sale of goods in excess of $500, or surety contracts. Law students typically keep in mind these categories using the mnemonic gadget “MY LEGS” (Marriage, Year, Land, Administrator, Goods, Surety).
The term “statute of frauds” comes, as a lot of American laws do, from England. An Act of the Parliament of England called An Act for Avoidance of Frauds and Perjuries required particular agreements to be in writing in order to avoid the possibility of scams and perjured statement at trials concerning these deals. It has actually entered contemporary American law both through the typical law and, later on, through the enactment of the arrangements of the Uniform Commercial Code (UCC).

An offender in a statute of scams case who wants to utilize it as a defense must raise the defense in a timely manner, typically in the pleadings. In many jurisdictions, the actual problem of proving that a written agreement exists just comes into play when a Statute of Frauds defense is raised by the defendant (though many courts will anticipate this concern and expect a composed agreement in a lot of agreement dispute cases). Frequently, even if the original writing has been lost or taken, if the accused confesses that it once existed he might be barred from raising the statute of scams as a defense.
In some cases, the statute of scams may likewise be unavailable if partial efficiency has actually occurred. In many jurisdictions, great faith performance by one celebration will lead to liability by the other party, regardless of a composed contract, under equitable “quasi-contract” theories such as quantum meruit and unjust enrichment. Similarly, an agreement might be imposed even if it does not adhere to the statute of scams if it abides by the Merchant Verification Rule. This rule, found in the UCC, mentions that if one merchant sends a composing sufficient to satisfy the statute of frauds to another merchant, and the getting merchant knows, or ought to understand, about the contents of the composed confirmation but fails to object within 10 days, the verification suffices to please the writing/signing requirements of both parties. Some jurisdictions also recognize promissory estoppel when the celebration raising the statute of scams has actually triggered the other celebration to detrimentally depend on the otherwise unenforceable, unwritten arrangement.

It is typically too late to deal with the statute of scams after something has failed. That is why it is important to think about these problems when an agreement is being made, not later. Speak to an attorney about the requirements of any agreement falling under the MY LEGS categories noted above. If, nevertheless, you are currently embroiled in a conflict in which the statute of scams has ended up being a concern, you will certainly need the assistance of a knowledgeable attorney with experience in both litigation and contract/ industrial law in order to make the best of what may be a tough case.

Written by Shirley Allen