Requires certain kinds of contracts to be in writing (exception to the general rule that oral contracts are enforceable)
Applies only to executory contracts (contracts where the parties have not completely performed)
Contracts that do not comply are unenforceable
Contracts Within (Covered By) the Statute of Frauds
Promises to perform the obligation of another
Collateral contract: one person (guarantor) agrees to pay the debt that a second person (principal debtor) owes to a third person (obligee) if the principal debtor fails to perform
Note: the promise to pay applies only if the principal debtor fails to pay
EXCEPTION: no writing is required if the main purpose of the promise by the guarantor is to obtain some personal economic advantage
Sales of an interest in land
Applies broadly to any transaction effecting an interest in land, including
Mortgage of real estate
Creation of an easement
Permission of mining on land
EXCEPTIONS: no writing is required if
Full performance by vendor: the seller has completely performed (I.e., delivered the deed to land); or
Part performance by vendee: the buyer clearly relies on the oral contract and changed his or her position in reliance (such as paying all or part of the price and building substantial improvements)
Will not permit buyer to receive damages, only specific performance (conveyance of the land)
Agreements that cannot be performed within one year
Tested from the date the contract comes into existence
Contracts for an indefinite period of time are not within the Statute of Frauds because they can be theoretically completed within one year
In most states, a contract “for life” need not be in writing because the performer could die within a year from the agreement and, thus, have fully performed within one year
Sales of goods for $500 or more
UCC governs
Includes agreements to modify existing contracts with a modified price of $500 or more
Promises by an executor or administrator of an estate to pay for the estate’s debts from personal funds: if decedent’s debts cannot be covered by the estate and the executor promises to pay creditors from her own funds, the promise must be in writing
Contracts in consideration of marriage
Prenuptial agreements (between the future spouses) involving matters such as transfers of property upon divorce or death must be in writing
Additionally, a promise by a third person for a benefit in exchange for the promisee’s agreement to marry another must be in writing
Meeting the Requirements of the Statute of Frauds
Nature of writing
Essential terms must be in writing
Common law
Identity of the parties
Subject matter of the contract (described with reasonable certainty)
UCC
Quantity of goods sold
Must be signed by the party against whom the agreement is being enforced (any writing, mark, initials, stamp, engraving, or other symbol will suffice as long as the party so intended)
Writing can consist of many writings combined
UCC and alternative requirements: if there is no signed written memorandum, the UCC will find the Statute to be satisfied by any of the following
Confirmatory memorandum between merchants (as long as other party receives and does not object within 10 days of receipt)
Part payment or part delivery (satisfies the Statute only for the quantity that has been delivered)
Admission in pleadings or court
Specially manufactured goods (seller must have made a substantial beginning in manufacturing or procuring the goods)
Promissory estoppel: courts have recently allowed the doctrine of promissory estoppel to allow some parties to recover for oral contracts in violation of the Statute of Frauds
Parol Evidence Rule
Definitions
Parol evidence: written or spoken statements not contained in the written contract
Complete integration: complete and final statement of agreement
Partial integration: final but not complete agreement
Merger clause: provision in contract stating that the writing is the complete integration
Scope
Bars the use of prior or contemporaneous statements to add to, alter, or contradict the terms of a contract that is a complete integration
Does not apply to oral contracts or writings that are not intended as complete or partial integrations
Excludes only evidence of statements prior to or during the signing of the written contract, not after
Applies to both common law and UCC contracts
Admissible Parol Evidence: evidence offered to explain the writing or to challenge the underlying contractual obligation (but not to contradict the terms) is admissible, specifically
Additional terms in a partially integrated agreement
Explanation of ambiguities in complete integration
Circumstances invalidating the contract in complete integration
Existence of a condition necessary for the contract to take effect in complete integration
Subsequent agreements in complete integration
Interpretation of Contracts: court will first attempt to discover the principal objective and then
Ordinary words will be given their usual meaning
Technical words will be given their technical meaning
Specific terms following general terms will be presumed to qualify the general terms
Ambiguities will be resolved against drafter of the contract
