Contract Law and the Writing Requirement: Satisfying the Statute of Frauds (2024)

Satisfyingthe Statute of Frauds

The Statute of Frauds (and relatedUCC provision) requires certain classes of contracts to be in writing to beenforceable. In this presentation, we will discuss how to satisfy the Statuteof Frauds’ writing requirement and discuss some alternative rules than canrender these contracts enforceable even in the absence of written agreements.

Satisfaction by Writing

To satisfy the Statute of Frauds, theagreement must be reduced to a writing and signed by the parties.[1]These two requirements create several questions including: What types ofwritings are sufficient to create a contract? What must the writing include?Who must sign the contract? What is a signature?

The Statute of Frauds can be satisfiedby any signed writing that (1)reasonably identifies the subject matter of the contract, (2) is sufficient toindicate that a contract exists, and (3) states with reasonable certainty the material terms of the contract.[2]In the case of UCC agreements (contracts for the sale of goods for $500 ormore), writing all material terms is not required. However, even the UCCrequires, at a minimum, an acknowledgment of agreement by the parties and aspecification of the quantity of goods that are to be exchanged.

A “writing” that satisfies the Statuteif Frauds does not require a formal written contract. It can be a notation on acheck, a receipt, a will, or even an informal letter. In addition, multiplewritings can be combined to show that a single contract exists to satisfy the Statuteof Frauds. The multiple writings must all relate to each other and all theother requirements of the Statute of Frauds must still be met. For example, if twoparties begin negotiating for a building to be leased for 5 years and theproperty is identified in the first writing and the lease price in the second,while a third signed letter agrees to the lease, the combination of thesewritings can be used to show the essential terms of the contract and thus makeit enforceable.[3]

The “signature” requirement can besatisfied with a symbol, identifying mark or even a thumbprint, if it can bereasonably interpreted as intended to be a signature. The signature can also beelectronic, such as “signing” the bottom of an email by typing one’s name. Theykey is intent – Was the mark intended to be a signature or its equivalent? Infact, a contract satisfies the Statute of Frauds even if it’s signed by oneparty and not the other. However, if the agreement is signed by only one party,it can only be enforced against that party. It cannot be enforced against theother party. It’s therefore very important to ensure that your signedcommunications indicate that the contract is not complete until the other partyalso signs the agreement.

Satisfying the Statute ofFrauds by Performance

Even if a contract that should be inwriting under the Statute of Frauds is not in writing, that does not eliminatethe possibility of its enforceability. Performance can also satisfy the statuteof frauds. The reason is that, while the Statute of Frauds is designed to avoidfraudulent enforcement of contracts that never took place, that the contractwas carried out can also be powerful confirmation of the agreement.

Services contracts are enforceableif they are fully performed. Assume that Joe agrees on December 1, 2018 to singat Jane’s New Year’s Eve 2020 party, taking place on December 31, 2019, for$300. Because the contract is incapable of being performed within a year ofDecember 1, 2018, the contract falls within the Statute of Frauds. Assume that,without a written agreement, December 31, 2019 comes and Joe performs at theparty. Later, Jane claims there was never an agreement. Because the contractwas fully performed, with Jane’s tacit consent, there is strong evidence thatan agreement existed. Thus, if Joe can show that there was an oral agreementfor him to play in exchange for $300, he can enforce the agreement despite thelack of writing.

Performance can also allow a realestate transfer agreement to be enforceable without a written agreement. Inthis context, performance means payment PLUS either possession of the land bythe purchaser or improvements made to the land by the purchaser. Again, thereason here is that it’s exceedingly unlikely that a purchaser would makepayment, the seller would accept payment and the purchaser would be allowed topossess or improve the property unless there was a legitimate agreement to sellthe land.[4]

The UCC also allows performance (meaningdelivery of the goods and acceptance of those goods by the purchaser) tosubstitute for writing, on the same theory as applies to the other cases. Theagreement is enforceable to the extent of the goods delivered and accepted. So,for example, if, in response to an order of widgets at $5 per widget, theseller sends 1,000 widgets and those are accepted by the purchaser, the sellercan enforce the agreement to sell 1,000 widgets for $5,000 (assuming the oralagreement can be proven). However, if the seller sends 1,000 widgets but laterproves that the agreement was to send 2,000 widgets (and the 1,000 was just thefirst shipment), the contract is still only enforceable to the extent of the1,000 already sold and accepted. In other words, performance renders an oralcontract for the sale of goods enforceable, but only to the extent of theperformance.

Another UCC caveat to the Statute ofFrauds applies to unique goods that cannot easily be re-sold. If, for example,a car dealership is asked by a customer for a car that is painted black andgold with a red stripe down the middle and to outfit the car with extra-widetires, hot pink hubcaps and an orange leather interior, and the dealer actuallydoes so, that is powerful evidence that the agreement existed. Why else wouldthe dealer render his car unsellable? Therefore, if he can show that there wasan oral agreement to sell the car, it will be enforceable even in the absenceof writing in spite of the UCC Statute of Frauds.

Moreover,if one party to an oral agreement can show that the other party fraudulentlyensured that there would be no writing to secure an advantage (such as, forexample, if an attorney told someone she was making a deal with that the writingwas unnecessary to preserve for her the option of backing out of the agreement),a court can enforce the agreement even without writing as a matter of fairness.

Finally, some states allow an oralagreement to be enforced if a party reasonably relied on the agreement to itsdetriment. (This is similar to the concept of promissory estoppel, which is anexception to the rule of consideration.) For example, if one makes an oralagreement to purchase a home and sells his current home in reliance, a courtmay enforce the oral agreement to avoid the injustice that would result fromthe party’s detrimental reliance on the oral agreement.

Since the 17th century, certaincategories of contracts are deemed so important and integral to a well-orderedsociety, that the law requires them to be written and signed. The Statute ofFrauds seeks to provide reliable evidence for courts to determine each parties’contractual obligations. However, as we have also seen, if there is othercompelling evidence that the agreement occurred or if severe injustice would becaused by enforcement of the Statute of Frauds, there are exceptions to therule.

Footnotes