Statute of Frauds

This essay is published for informational purposes only.  It is not legal advice, nor is it intended as a substitute for the advice of your attorney.

Under the Uniform Commercial Code, the Statute of Frauds is a legal concept that requires certain types of contracts to be executed in writing and signed by all parties in order for the contract to be binding.  The types of contracts and rules that comprise of the Statute of Frauds vary from state to state.  The purpose of the Statute of Frauds addresses the fact that verbal agreements can be vague, making it difficult to prove what terms were agreed by parties.  However, written and signed agreements create a permanent record of the details of the agreement.  This provides greater assurance that each party will live up to their contractual obligations.

As a general statement, a contract for the sale of goods valued at $5,000 or more is not enforceable by way of action or defense based on the Statute of Frauds unless there is some record sufficient to indicate that a contract was negotiated and completed between the parties and signed by the party against which enforcement is sought.  The precise language of the Statute of Frauds varies between jurisdictions, but generally requires a writing for the following types of contracts:

(1) Contracts for the sale of land;
(2) Contracts for the sale of goods above a certain dollar amount;
(3) Contracts that cannot be completed in less than one year; and
(4) Contracts where one party is to pay the debt of another party.

Edited by Michael C. Dennis.  Mr. Dennis is a consultant.