Let’s talk about statute of frauds, and why you need to get it in writing. As in, some valid contracts, enforceable by a court of law, must be in writing. Depending on the matter of subject and agreement made.
In short, a statute of frauds is a statute that requires by law to be written in contract.
Those statutes are created for ability to prevent any fraud by forming contracts. Many statutes don’t have to entirely be in formal writing as a contract. There just needs to be enough writing, of any form, that covers the main aspects of the agreement made.
What Types of Contracts Must be in Writing?
A statute of frauds states that certain forms of a contract have to be in writing in order to be enforced.
In most states, the following types of contracts must be in writing:
- Contracts to transfer or sell land;
- Contracts that relate to the subject of marriage;
- Contracts to sell goods that are worth $500 or more;
- Contracts that cannot be completed entirely during the one year after signing.
- Contracts involving promises to pay off another person’s debt. These are sometimes called “surety contracts”; and
- Contracts where an estate executor states they will pay debts from their own personal funds.
Any of the above certain types of contracts must be in writing to be enforceable.
Those contracts need to include:
- All basic terms and conditions of the agreement;
- Identification of the people that are involved in the agreement; and
- A clear statement the subject of the agreement.
It’s important to know that not all contracts have to be in writing. There’s a lot that doesn’t necessarily involve the statute of frauds.
An agreement that doesn’t include the subjects stated above are contracts that don’t need to be put into writing. There are a lot of agreements that can be made up of oral contracts alone. As oral contracts are also legally binding. With them though, there are specific and different contract requirements to be considered valid.
Who Can Write a Contract?
Most people and parties are legally allowed to write and enter into a contract.
There are three major exceptions to this general rule.
- Minors: Generally, minors cannot enter into a contract. Only people or parties who are older than the minimum legal age can form a contract. Usually, the minimum legal age is 18 years old. For example, a six year old cannot enter into a contract.
- Incompetence: The people or parties to a contract must be mentally competent. Competency, also sometimes called capacity, means that the person understands that they are making a contract and the consequences of doing so. For example, people diagnosed with certain severe mental disabilities may not be able to enter into a contract.
- Intoxicated: If a person or party is severely intoxicated they may not be able to form a contract. Intoxication means that the person is under the influence of drugs or alcohol. Usually, the person must be so intoxicated that they do not understand or remember their actions. For example, if a person is extremely drunk, they may not be able to enter into a contract.
Most people are eligible to write a legal contract. There’s not a lot of rules delegating who can write a contract, but it’s important to realize how technical it can be. Drafting a contract and properly reviewing it needs to be planned and requires at least minimal knowledge of contract law.
On average, every person isn’t going to be aware of contract law as it’s something that’s very complex.
Even simple agreements may need a complicated written contract. That’s why at Ruesch and Reeve Legal, we recommend having a professional attorney either write, or review any contract before you permanently sign it. This is because with a legal obligation like a contract, you don’t want to end up in something that was written incorrectly.
Also, we recommend putting any contract into written form. Even when the statute of frauds isn’t needed, having a written contract makes it easier to enforce the deal compared to just having an oral contract in place.
As previously stated, a written contract is permanent proof of an agreement. Meaning if there was ever dispute between the parties in the future, you’d have concrete proof of the agreement.
What Happens If the Parties Do Not Follow the Contract Writing Requirements?
If there is a statute of fraud writing requirement, both parties have to put the contract in a written document. When they fail to do so, the end result can hold a huge detriment of consequences for both involved.
Say you have an agreement that isn’t following contract writing requirements, that means it may not be able to be enforced in court. A lot of times, it’s up to the court’s decision whether or not there’s an existing contract.
Meaning, a court can’t resolve any contract disputes. So, if there’s a disagreement, both parties might not be able to look to the legal system to solve the issue at hand. That’s not good for you, especially if it involves you owing money.
In some states, there’s options to look to the court for enforcing an oral contract. Even if it should have been in writing under the statute of frauds rules. A court only does this during specific situations, limited to the circumstances.
Situations where a court enforces an oral contract that’s not in compliance with the statute of frauds include:
- Performance: Partial or substantial performance means that a party has either performed part or significant portion of their responsibilities under the contract. If one of the parties has already partially or substantially performed, a court may enforce the contract against the other party. This is based on the idea of fairness.
- Detrimental Reliance: Detrimental reliance means that one of the parties relied on a promise made by another party and was harmed because of that reliance.
- Specially Manufactured Goods: A court may enforce a contract without a writing if it involves specially manufactured products or goods. The agreement must be for $500 or more, the goods must be custom made for a specific buyer, and the products cannot likely be sold to another buyer. For example, this might include the sale of a specially engraved piece of jewelry with the buyer’s first and last name on it.
Do You Need to Hire a Lawyer for Help with Contract Writing?
Hiring a contract lawyer will always be in your best interest when writing contracts. An attorney will help to advise you on any writing requirements in a contract. A local attorney should be able to draft a contract for you, as well as properly review it before you sign it.
The law of contract and the statute of frauds can be very difficult to navigate. Having a highly qualified attorney on hand that’s able to advise on which laws apply to the situation you’re in is a good idea. Alos, if there’s a dispute involving the contract, that lawyer should be able to represent you in court as well.
Hire Ruesch and Reeve Legal for Help with Contract Writing
Ruesch & Reeve, PLLC is a general practice law firm located in Southern Utah. We provide comprehensive services for individuals or corporate clients with legal needs involving transactional, litigation or regulatory assistance.
From the initial consultation, we dedicate ourselves to finding the best resolution for our clients’ legal issues.
Due to our experience, we provide quality legal services to our clients every day at very reasonable rates. We are committed to providing cutting-edge legal services and creative legal planning.
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