Contracts that Fall Within the Statute of Frauds

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  • 0:05 Statute of Frauds
  • 2:53 Marriage as Consideration
  • 3:54 Contracts for More…
  • 4:45 Sale of Land
  • 5:17 Promises by an…
  • 7:43 Sales Contracts
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

A statute of frauds is a state law that only applies to particular types of oral contracts. In general, a statute of frauds requires that certain types of oral contracts be written and signed. This lesson explores the types of contracts that typically fall within a statute of frauds.

Statute of Frauds

A statute of frauds is a state law. Different states have different statutes of frauds, but all of these statutes are limited. Statutes of frauds only apply to certain types of oral contracts. Usually, an enforceable contract can be oral or written, but statutes of frauds set two main requirements for certain oral contracts before those contracts can be enforceable.

First, a contract that falls within a statute of frauds will be unenforceable unless there's a writing that proves the agreement. The writing doesn't have to be a formal, written contract. Instead, the writing must simply prove that there was an agreement and set out any material terms of the agreement. Material terms are significant and important details, such as the parties involved and the amount to be paid.

Secondly, the writing must be signed. Most of the time, it's not necessary for both parties to sign the agreement. In order to satisfy a statute of frauds requirement, the agreement must be signed by the party that disputes the contract. If I'm seeking to enforce an oral contract that I made with you, then you must have signed the writing.

Certain Oral Contracts

A statute of frauds doesn't apply to most types of contracts. Most contracts can be valid and enforceable when made through an oral agreement. However, it's important to know what types of contracts a statute of frauds affects. Jurisdictions vary, but there are six main categories usually covered by this type of statute.

Statutes of frauds cover:

  1. Promises that involve marriage as consideration
  2. Contracts that can't be performed within one year
  3. Contracts that involve the sale or transfer of land
  4. Contracts that involve promises by executors to pay estate debts
  5. Contracts that involve a promise to act as a guarantor or surety
  6. Contracts that involve the sale of goods worth more than $500

Some states have also added some life insurance contracts, contracts to make a will, and contracts to pay a real estate agent's commission. Let's take a look at each of the six categories usually covered by a statute of frauds.

Marriage as Consideration

The first category includes promises that involve marriage as consideration. For example, let's say that Mike promises to buy Lucy a new house if Lucy will marry him. Lucy agrees, and so Mike buys the house and puts the title in Lucy's name. Lucy then refuses to marry Mike. The marriage was used as consideration for the agreement to buy a new house. Therefore, if Mike wants to enforce this agreement, the agreement must be proved through something in writing, and Lucy needed to sign the writing.

Note that a statute of frauds would also cover a prenuptial agreement. In many states, the marriage itself is the consideration. This makes the agreement fall squarely within a statute of frauds. Other states don't require consideration but require that the prenuptial agreement be in written form and signed by both parties.

Contracts for More Than One Year

The second category includes contracts that can't be performed within one year. If it's at all possible for the contract to be performed within one year, then the contract doesn't fall within a statute of frauds.

Let's say Mike promises to let Lucy pick free apples from his orchard for the rest of Lucy's life. In exchange, Lucy promises to water Mike's trees. This is a lifetime contract, but it doesn't fall under a statute of frauds. This is because Lucy could die within the year and the contract would be extinguished. Even if Lucy is still alive 20 years later, the contract won't fall under a statute of frauds. A statute of frauds applies only at the time the contract was made.

Sale of Land

The third category includes contracts involving the sale or transfer of land. This includes any sale of an interest in land, like a part ownership, mineral rights, or a mortgage.

Let's say Lucy agrees to lease her garage apartment to Mike for the next 18 months. A statute of frauds typically covers any lease agreement that lasts for more than one year. Therefore, Mike must sign a writing that proves this contract.

Promises by an Executor or a Guarantor

A statute of frauds also typically covers certain promises made by executors or by guarantors. Let's start by discussing how a statute of frauds applies to executors.

A statute of frauds usually covers those contracts that involve a promise by an executor to personally pay a debt that belongs to the estate. An executor, or administrator, is someone who is appointed to carry out the terms of someone's will. Sometimes, executors promise to personally answer for a debt of the estate.

For example, Mike dies and his sister Lucy is serving as the executor of his estate. Lucy is handling the sale of Mike's house. There's a chance the house will sell for less than the mortgage. Lucy tells Mike's mortgage company that she'll pay the extra if the proceeds of the sale don't cover the mortgage. This promise needs to be proved in writing and signed by Lucy, or the mortgage company won't be able to enforce it.

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