Text 4 What Contracts Are Subject to the Statute of Frauds

To be enforceable under the Statute of Frauds, six important types of executory contracts must be in writing and signed by the party against whom the contract is to be enforced. As an alternative, the contract must be provable by some other writing, such as a letter signed by such party. Obviously, since either party might later want to sue the other in case of breach, good business practice calls for both parties to sign.

Contracts subject to the Statute of Frauds include those to:

1 buy and sell goods for a price of $500 or more;

2 buy and sell real property or any interest in real property;

3 do something that cannot be performed within a year;

4 pay the debt or answer for a legal obligation of another person;

5 give something of value in return for a promise of marriage;

6 be personally liable for a debt of an estate of someone who has died.

1 A Contract for the Sale of Goods for $500 or More

To be enforceable, a contract for the sale of goods (tangible personal property) for $500 or more would usually have to be a signed writing or a signed agreement. The writing would need to be signed by the person against whom enforcement was sought.

A Contract to Sell or a Sale of Any Interest in Real Property

The transfer, or promise to transfer, of any interest in real property must be in writing to be enforceable. (Real property includes land, buildings, and other things permanently attached to land; personal property includes all other property.)

Thus, there should be written evidence of contracts to transfer title to the entire property. Leases also come under this classification. However, most states have special statutes which provide that oral leases for a period of one year or less are enforceable. In some states, an agreement authorizing or employing an agent to buy or sell land must also be in writing.

As an exception to the general rule, a court will enforce the oral contract if the buyer has also done all of the following:

a) made partial payment;

b) occupied or possessed the land;

c) made substantial improvements to the land.

A Contract That Cannot Be Performed Within One Year