Statute of Frauds Is a

Statute of Frauds is a catch-all phrase that sums up the idea that some contracts must be in writing in order to be enforceable. Although the technical requirements of the Statute of Frauds vary by jurisdiction, the basic premise of the Statute of Frauds is that certain contracts are unenforceable unless they are in writing.

Among those contracts are: those for the sale of goods worth more than $500; promises by an executor to answer for the debt of a decedent; suretyship contracts; promises made in consideration of marriage; contracts for the sale of land; and certain landlord-tenant contracts. Section 2-201 of the Uniform Commercial Code (UCC) details the general requirements of the Statute of Frauds in relation to the sale of goods.

In general, the Statute of Frauds provides that contracts for the sale of goods for a price of $500 or more are unenforceable unless a writing exists that indicates that a contract has been made. The writing must be signed by the party against whom enforcement is sought or his agent (First Year, A-111). In regards to a sale of goods, a writing is insufficient if it does not specify the quantity of goods to be sold. The Statute of Frauds does not require the parties to execute a formal contract.

A confirmatory memorandum that has been signed by the party against whom enforcement is sought is sufficient to satisfy the Statute of Frauds. "Courts applying the Statute of Frauds have not required the writing to be formal or even that it have been seen by both parties" (Talley). In fact, for contracts covered by the Statute of Frauds, the obligations do not have to be mutual. Furthermore, the writing does not have to be made at the time of the contract.

As the Statute of Frauds continues to evolve, modern courts have determined that tapes, video recordings, and electronic communications can satisfy the writing requirement of the Statute of Frauds. History In 17th century England, there was virtually no regulation of the "rich mixture of financial interchange, property ownership, and agreements for every conceivable transaction" (Rain). Most bargains were based on oral agreements, not necessarily because people were more trustworthy, but because most people could not write. However, fraud was a serious problem. The oral agreements were difficult to enforce.

Furthermore, there was no real established law or regulations governing the construction of contracts. Actions based upon oral promises were frequently unsuccessful due to perjury and fraud. As the number of lawsuits increased, so did the incidents of perjury and fraud. It became increasingly apparent that oral evidence was unreliable. Charles II, the King of England, sought a solution. Sir Leoline Jenkins, a well-respected attorney, privy councilor, and secretary of state came up with a solution.

Jenkins drafted the English Act for the Prevention of Frauds and Perjuries, which was enacted in 1677. The English Act for the Prevention of Frauds and Perjuries provided that certain types of contracts were too important to be enforced unless they were in writing. The contracts covered included: contracts for the sale of land; contracts that could not be performed within one year; surety contracts; marriage contracts; contracts involving the sale of goods over a certain amount; and an executor's promise to administer a decedent's estate.

The idea that certain contracts are too important to rely on oral promises has endured in Anglo-American jurisprudence. Although England repealed the Statute of Frauds in 1954, is still alive and well in American jurisprudence. Most states have adopted a version of the Statute of Frauds. Furthermore, due largely to the efforts of Karl Llewellyn, the Statute of Frauds has been codified in the Uniform Commercial Code.

While versions of the Statute of Frauds vary from state to state, there has been very little change in what categories of contracts must be in writing. Some of the additions have included wills and real estate contracts. Examples Although each state has its own version of the Statute of Frauds, they are all based on the English Act for the Prevention of Fraud and Perjury.

The scenarios where the Statute of Frauds applies are wide-ranging and it is not always easy to determine whether or not a particular situation falls under the Statute of Frauds. It can also be difficult to determine whether or not a particular document satisfies the writing requirement of the Statute of Frauds. For example, the modern Statute of Frauds requires that a contract for a sale of goods worth more than $500 be in writing in order to be enforceable.

A common scenario where the Statute of Frauds might apply is in the sale of automobiles. A customer who enters into an oral agreement with a car salesman for the purchase of a vehicle worth more than $500 will be left without recourse if the salesman sells the car to another buyer unless their agreement has been reduced to writing.

What type of writing would work to ensure that the customer and the salesman have entered into a contract? Obviously, a detailed contract for the sale of the automobile would satisfy the writing requirement. In addition, the salesman would be able to enforce the sales contract if he obtained something in writing from the customer that indicated the customer's intent to purchase the vehicle.

An example of the type of writing that would satisfy that requirement is if the customer left a deposit check and indicated in the memo line that the check was a deposit on a specific vehicle. However, in many jurisdictions, the customer's deposit check might not be sufficient to give the customer a right of action against the car salesman. The writing has to be "signed" by the person against whom enforcement is sought.

Therefore, to preserve his rights, the customer would need to get something from the dealership promising him the vehicle in question. In some jurisdictions, the fact that the car salesman accepted the check with a notation in the memo line that it was for a specific vehicle and did not object to the form of the check would be sufficient to give the customer a right of action against the salesman. Another example of a situation where the Statute of Frauds applies is in suretyship contracts.

A suretyship contract is where a party offers to assume responsibility for the debts of another. A scenario where that might be applicable is where the surety tells the lender that if the lender will lend money to a borrower, the surety will repay the lender if the borrower fails to repay the loan. Unless the lender gets the agreement in writing, he will be unable to collect the money from the surety.

This scenario is actually fairly common, as anyone who has ever seen daytime court television shows can attest. A person (the surety) asks someone in their family (the lender) to lend money to a boyfriend or girlfriend (the borrower). The couple breaks up and the boyfriend or girlfriend refuses to repay the money due to the family member. The family member seeks repayment from the surety, who no longer feels obligated to cover the borrower's expenses, given that they are no longer a couple.

The lender may have written proof that he made a loan to the borrower, such as a check written by the lender to the borrower, indicating in the memo line that it was a loan, which has been endorsed by the borrower. While such a writing would be sufficient to establish liability on the part of the borrower, it would not be sufficient to establish any liability on the part of the surety.

Another type of contract covered by the Statute of Frauds is a contract for the conveyance of land. At first glance, it may seem unlikely that parties would enter into an oral agreement to convey real property. However, it is actually very common for parents to promise a son or daughter that, if that child takes care of the parents in their old age, the child will receive the family home upon the parents' deaths.

If that agreement is not in writing, then whatever other written provisions the parents have made regarding disposition of the family home will govern its disposition. Even if the parents have not made any type of written disposition of the family home, that child will be unable to enforce the oral agreement. Instead, intestacy laws will govern the disposition of the real property in question.

Although most states no longer recognize any right to enforce most promises made in anticipation of marriage, the Statute of Frauds is still applicable in most of the states that do recognize such promises. In a state that recognized marriage or the promise of marriage as consideration for a contract, parties may make a conditional promise of marriage.

For example, if Texas recognizes a promise made in anticipation of marriage and a man who lives in Dallas promises a woman that lives in Houston that if she moves to Dallas they will get married, the woman may be able to enforce that promise. However, the woman will have to get the promise in writing. Furthermore, the woman's remedy would not be to force the man to marry her, but to receive compensation for the monetary damages that she suffered as a result of the move.

While the English Act for the Prevention of Frauds and Perjuries covered the type of agreement just described, it also covered other types of promises made in contemplation of marriage. Perhaps one of the most common of those scenarios was when a woman would allege that a man promised to marry her if they engaged in certain sexual activities. A man who made such a promise might later deny it. The final type of contract involves those contracts that cannot be completed in less than a year.

An example of that type of contract is a contract for a two-year gym membership. A typical contract would provide a customer with a certain amount of gym access in exchange for a monthly payment for a certain amount of months. Even if the total amount of the contract is less than $500, because it is impossible for either the customer or the gym to fulfill their contractual obligations in a period of less than one year.

However, there is an importance difference between contracts that contemplate a performance that will take longer than one year and contracts that cannot be completed within one year. For example, a construction contract that requires the builder to erect a home within 18 months is not a contract that cannot be performed within one year. The builder could always complete the home within a one-year time period. Therefore, the contract falls outside of that area of the Statute of Frauds.

What Qualifies as a Writing The Statute of Frauds does not require a written contract. "The common term is 'evidenced by a writing'" (Rain). Therefore, a number of different types of writings may be sufficient. The contract may be pieced together from several different documents, as long as the documents clearly refer to the same transaction. Furthermore, the Statute of Frauds generally requires that a writing be signed by the party against whom it is to be enforced. However, many things besides an actual signature satisfy this requirement.

For example, an order placed by a purchaser to a supplier on the purchaser's letterhead will be enforceable against the purchaser. Likewise, an order placed by a purchaser to a supplier that is not on company letterhead, but that was faxed from the purchaser's fax machine or sent from the purchaser's email address will probably be enforceable against the purchaser. In many states, confirmatory memorandum, if not contradicted by the other party, can become enforceable against either party.

For example, imagine that a bride has gone to a florist and looked at a certain number of floral arrangements for her wedding. She goes home to decide what type of arrangements she wants, and then calls the florist to inform him of her choice. She tells him that she wants 10 of the rose arrangements. The florist then sends a confirmation fax to the bride, stating that she has ordered 10 arrangements, consisting of roses and baby's breath, at $45 per arrangement.

In many states, if the bride accepts the confirmatory memorandum without objection, it is sufficient to satisfy the Statute of Frauds. Furthermore, to satisfy the writing requirement, the writing does not have to be mutual. If one party writes down an agreement for his own personal use, the agreement may be enforceable against that party, but not the other. This situation could arise frequently for salesmen taking orders, or people who do customized work.

Finally, given the proliferation of alternative types of media, there may no longer be a requirement of a writing in order to satisfy the Statute of Frauds. In some jurisdictions, a tape, video recording, or other form of electronic media may satisfy the writing requirement. In fact, two major pieces of legislation, the Electronic Signatures in Global and National commerce Act (E-Sign) and the Uniform Electronic Transactions Act (UETA) mandate that a contract is not to be "deemed invalid merely because it is in electronic form" (Huey, 683).

Exemptions Not all contracts that appear to fall under the Statute of Frauds are unenforceable without a writing. One of the most common exceptions is for the sales of goods that are to be specially manufactured for the buyer, which are not suitable for sale to others. Another common exception is that, if a party admits the existence of a contract, he will be estopped from alleging that a contract was never made. Finally, if a party accepts or pays for goods, he loses his Statute of Frauds defense.

Take for example a woman who goes to a seamstress for a custom-made wedding dress. The parties never enter into a written contract, but the seamstress sews a wedding dress that is fitted exactly to the bride's measurements. While the seamstress is working on the dress, the bride attends a bridal show and finds a designer wedding gown at a remarkable price. The bride then attempts to cancel her order from the seamstress.

Because the dress is custom-made for the bride, the seamstress will be able to enforce the contract, even though there is no writing. There is another exemption to the Statute of Frauds. It involves where both parties to the contract are merchants, or otherwise sophisticated businessmen. In that instance, some, if not all, of the requirements of the Statute of Frauds are waived.

For example, if a buyer and a seller are both involved in the same industry and the buyer regularly purchases items from the seller, the buyer might not have to provide the same type of written proof of a contract in order to show that it had a contract with the seller, even if the contract is for an amount greater than $500. Furthermore, parties engaged in the same business may also be subject to a lesser version of the Statute of Frauds.

Terms used in their business can come in as parol evidence to help explain or define parts of a written contract. For example, a buyer that places an order with a seller for "4" of an item, but really means that he is placing an order for 4 million units would probably be able to demonstrate that it was an industry standard to refer to the items in groups of a million units.

Finally, even contracts that are required to be in writing because of the Statute of Frauds can be orally modified or rescinded. Even if the original written agreement contains a clause prohibiting oral modifications, most agreements can be orally rescinded. To determine whether an oral modification is permissible, the contract created by the modifications has to be treated like the original contract.

If the contract, as modified, would have to be in writing to satisfy the Statute of Fraud's requirements for an original contract, then the modification has to be in writing. In that instance, an agreement that originally does not fall under the Statute of Frauds can be transformed into an agreement requiring a writing. Furthermore, in states that have adopted the UCC, section 2-209(2) allows for a written contract to contain a binding clause prohibiting oral modifications of the original contract.

Evolution The Statute of Frauds has lasted for over 325 years. It has not lasted because of an inherent fairness, but instead because it appears to offer some clarity and certainty to contracts or agreements. The appeal of the Statute of Frauds for American jurisprudence seems to be that it offers a continual idea of what is required to form a contract across the states. The first attempt to codify the law and make it uniform across the states was the UCC.

Many states have adopted the UCC, especially its sections relating to the Statute of Frauds. However, the future of the Statute of Frauds is anything but certain. Although the Statute of Frauds lasted for almost two centuries in England, it was repealed in 1954 by the English Parliament. Even in America, which has embraced the Statute of Frauds, many judges have resisted the Statute of Frauds. The Statute of Frauds has been used by many defendants to avoid contractual obligations.

For that reason, the Statute of Frauds "has come upon hard times in many legal systems" (Rain). One of the reasons that it survives in American law today is because of the certainty it provides to contractors. As incorporated in the UCC, the Statute of Frauds helps achieve uniformity in contracts from the ground up. However, in today's global economy, there is a need for uniformity in transnational commercial law as well as domestic law (Spiedel, 166).

Therefore, the United Nations Convention on Contracts for the International Sale of Goods (CISG), attempts to establish uniformity in transnational commercial contracts. In the United States, the CISG is a self-executing treaty, which has the force of federal law (Spiedel, 166). Where applicable, the CISG preempts Article 2 of the UCC, which contains the Statute of Frauds. However, the CISG does not preempt Article 2 in all areas. "Both operate within their own sphere, creating horizontal bands of uniformity for the domestic and the international contract for sale of goods" (Spiedel, 167).

Therefore, there is the very real possibility that contracts with international parties in states that have adopted the UCC may not be governed by the Statute of Frauds. International treaties and transnational commercial law are not the only areas in which the realities of modern transactions have changed the Statute of Frauds. There has been an exponential increase in Internet use and electronic commerce, which has created a need for a revision of what constitutes a writing.

In fact, although Congress has traditionally been reluctant to regulate in the area of contract law, instead reserving that area for the states, it enacted E-sign (Huey, 688). E-Sign and the UETA both provide that, essentially, electronic signatures, contracts, and records were to be given the same weight as hard copy signatures in interstate and international commerce (Huey, 691). Fraud Statistics Fraud is difficult to track because, although it is illegal, not all victims report the crimes, and there is not necessarily a central reporting place for different types of fraud.

In addition, with the proliferation of Internet access, fraud has skyrocketed. Not only does the Internet provide a measure of anonymity and an extra layer of protection to potential con artists, but it also provides an expanded opportunity for con artists to find victims. In December 2003, The Internet Crime Complaint Center (IC3) was created from the Internet Fraud Complaint Center (IFCC). In 2003, the IC3 and the IFCC received 124,509 complaint submissions, which were composed of fraudulent and non-fraudulent complaints primarily related to the Internet (National, 3).

Of those complaints, IC3 referred 63,316 complaints of fraud. The total losses from fraud were $125.6 million, with a median dollar loss of $329 per complaint (National, 3). Internet auction fraud comprised 61% of the referred complaints (National, 3). A failure to deliver either the merchandise or payment accounted for 20.9% of the complaints (National, 3). "Electronic mail (E-mail) and web pages were the two primary mechanisms by which the fraudulent contact took place" (National, 3).

Furthermore, there was "a steady increase in the number of complaints filed for each quarter of 2003 (National, 4) and "complaint submissions have increased annually" (National, 4). As shown by the statistics, the growing use of the Internet has dramatically increased the incidence of fraud. Furthermore, the Internet has provided the anonymity necessary to make fraud more and more possible. Analysis The Statute of Frauds is aimed at simplifying contractual relationships by specifying the type and nature of contracts that must be in writing.

By providing a bright-line rule for when a written agreement is necessary, the Statute of Frauds helps parties determine whether or not a written disagreement is necessary. Given the proliferation of Internet usage and the likelihood that people will enter into electronic contracts, E-Sign and UETA were drafted to give electronic contracts the same effect as written contracts.

Rather than eliminate the Statute of Frauds, E-Sign and UETA have simply provided additional ways for a contracting party to require with the requirement that an agreement be in writing and "signed" by the party against whom enforcement is sought. However, it remains to be seen if the Statute of Frauds will continue to thrive in American jurisprudence.