Contracts-Statute of Frauds
Contracts may either be in writing or oral. Whether the contract is oral or in writing, it is equally valid, although there may be problems enforcing certain types of contracts that are not in writing. Most states have adopted, in some form or another, a law know as the Statute of Frauds. The Statute of Frauds is a law that is designed to minimize the possibility of fraudulent behavior in certain types of transactions. For instance, a person buying or selling land cannot enforce a contract of sale for land unless that contract is in writing. The logic behind that requirement is that over the years, there has been so much litigation relating to oral contracts for the sale of land and allegations of fraudulent behavior that those types of contracts must be in writing and be signed by the person against whom the agreement is being enforced. That type of requirement is designed to minimize the likelihood of there being any fraud perpetrated against the buyer. If the seller signs the agreement and agrees to sell the land for a certain price and all of that is confirmed in writing, then the chance of that transaction being fraudulent is considerably reduced.
The Statute of Frauds is designed to minimize the possibility of fraudulent behavior.
Other types of transactions that typically need to be in writing to be enforcable are transactions that involve pledging the credit of another for a transaction, agreements to marry, agreements to pay real estate brokerage commissions, agreements that cannot be performed within one year, and agreements to lend money or extend credit for a significant amount, such as $25,000 or more. All of those types of transactions are ones that over the years have been found to be the subject of frequent litigation with allegations being made of fraud. Because of that, many states have found it best to require those types of transactions be put in writing and signed by the party against whom enforcement of the contract is being sought.
