The Statute of Frauds

Chapter 6

The Statute of Frauds

• To be enforceable, the following types of contracts must be in writing and signed:

• Contracts involving interest in land.• Contracts involving “One year rule.”• Collateral or Secondary Contracts.• Promise made in consideration of marriage.• Contracts for the sale of goods priced at

$500 or more.

Contracts Involving Interest in Land

• Land includes the earth and all physical objects that are permanently attached to the soil:

• buildings, fences, trees.

• All contracts for the transfer of other interest in land: mortgages and leases.

The One-Year Rule

• A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable.

• One-year period begins to run the day after the contract is made.

• Test: Whether performance is possible (although unlikely) within one year.

Collateral Promises

• A collateral promise is one made by a third party to assume the debts or obligations of a primary party to a contract if that party does not perform.

• Main Purpose Rule” Exception . – If the main purpose of assuming secondary

liability is the guarantor’s personal benefit an oral promise will be enforceable.

Contracts for the Sale of Goods

• UCC requires a writing or memorandum for the sale of goods priced at $500 or more.

• Exceptions:– Specially manufactured goods– Admissions– Partial Performance

Sufficiency of the Writing

• Common Law Rule: Writing must name the parties, identify the subject matter, consideration, and other essential terms, and

must be signed by the the party against whom enforcement is sought.

UCC Rule. Must indicate that the parties intend a contract and be signed by party against whom enforcement is sought. Will not be enforcable beyond the quantity shown. All other terms may be proven by oral testimony.

Parol Evidence Rule

• If the court finds that the parties intended their written contract to be a complete

and final embodiment of their agreement, a party cannot introduce in court evidence

of any prior or contemporaneous oral agreement or promise to contradict, alter or modify to written contract.

Exceptions to the Parol Evidence Rule

*Contracts subsequently modified.*Voidable or Void contracts.*Contracts containing ambiguous terms.*Prior dealing, course of performance, or usage of

trade.*Contracts subject to orally agreed-on conditions.*Contracts with an obvious or gross clerical error

that clearly would not represent the agreement of the parties.