Statute Of Frauds

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Statute of Frauds (Definition)

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Forbids enforcement of specific classes of contracts unless there is written memorandum or an applicable exception

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Statute of Frauds (Purpose)

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Prevent fraud or perjury in certain types of cases. Historically, parties to a lawsuit were not allowed to testify, so there was no way of preventing a dubious person from claiming that an agreement had been reached, or not. Furthermore, the requirement of a writing was meant to help in situations where time may have passed and the memories of the witnesses probably were not very reliable

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Writing Requirement

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The writing must reflect the fact that the parties had a contract. It must be signed by the party to be charged. It must state with reasonably certainty the essential terms of the unperformed promises of the contract

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One Year Provision

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An agreement that cannot be performed according to its terms within one year of the date of the making of the contract must be evidenced by a writing

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Suretyship (Rule)

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A surety is someone who has agreed to answer for the duty of another

Writing required

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Suretyship (Leading Object Rule)

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If the promisor makes the promise primarily because he wants to achieve some personal benefit (usually financial benefit) the promise is outside of the statute an NO writing is required

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Modifications to the Contract

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If the modification falls within the statute of frauds, then the modification must also be represented in writing

Usually look to see what is being modified (material terms)

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Equitable Estoppel

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A party may use equitable estoppel in response to a statute of frauds defense where there was a reasonable reliance on a factual assertion

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Promissory Estoppel

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A promise is enforceable notwithstanding the Statute of Frauds if justice can be avoided ONLY by the enforcement of the promise

However, courts will not regard this with favor because to do so eviscerates the Statute of Frauds. Even courts that dislike the Statute of Frauds tend to say that if there is to be Statute, application of a promissory estoppel approach is not appropriate. This is particularly true in a suretyship situation, where the whole point of the promise is to encourage the promisee to rely on the promise of the surety and act potentially to his detriment.

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Satisfaction of Writing Requirement

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(1) Signed by the charged party

(2) Reasonably identify the subject matter

(3) Sufficiently indicate that a contract has been made between the parties

(4) State with reasonable certainty the essential terms of the unperformed promises in the contract

If two contracts exist (one signed, one unsigned), there must be parol evidence proving a connection between the two

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Restitution (mitigating doctrine)

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You can recover for the two months of work in a two-year, oral contract, even if unenforceable

Restitution factors: giving someone compensation for the benefits conferred to the other party (doctor saving your life on the street)

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the statute of frauds if injustice can only be avoided by enforcement

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Exceptions to the Statute of Frauds

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Waiver

Equitable Estoppel

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Interest in land (even leases)

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Need to be in writing

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Option to Cancel

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Sometimes parties include the option to cancel. This takes it outside the statute as long as one way to perform within a year

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Result of non-compliance

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Does not mean it will be enforceable, but restitution remedies can apply