The Statute of Frauds: Which Contracts Must Be in Writing
Most people assume a handshake deal is just as binding as a signed contract. Often it is. But for certain categories of agreements, the law requires more than a verbal promise, it needs to be in writing. This rule comes from the statute of frauds, a legal doctrine with roots in 17th-century English law that survives today in nearly every U.S. state.
What Is the Statute of Frauds?
The statute of frauds is a legal principle requiring that specific types of contracts be in writing and signed by the party being held to the agreement in order to be enforceable. Its purpose is straightforward: prevent fraud by ensuring that certain important agreements aren't based solely on someone's word. Without a written record, disputes over these contracts would often come down to a he said she said situation.
Importantly, the statute of frauds doesn't apply to every contract, only to specific categories that lawmakers determined carry enough risk or consequence to warrant written proof.
Contracts That Typically Must Be in Writing
While the exact list varies by state, most jurisdictions require a written agreement for the following types of contracts:
Contracts for the sale of real estate. Any agreement to buy, sell, or transfer an interest in land or real property must be in writing. This includes not just outright sales but also leases exceeding one year in most states.
Contracts that cannot be performed within one year. If an agreement, by its terms, cannot possibly be completed within one year from the date it's made, it falls under the statute of frauds. The key is whether performance is impossible within a year, not just unlikely.
Contracts for the sale of goods over a certain value. Under the Uniform Commercial Code (UCC), which governs sales of goods in the U.S., contracts for goods priced at $500 or more generally must be in writing.
Promises to pay the debt of another. Known as "suretyship" agreements, these arise when someone agrees to cover another person's debt or obligation if that person defaults.
Contracts made in consideration of marriage. Prenuptial agreements and similar promises made in exchange for marriage fall under this category.
Executor or administrator agreements. If an executor of an estate personally promises to pay the estate's debts out of their own funds, that promise must be written.
What Counts as a "Writing"?
The bar isn't especially high. Courts generally accept any written record signed by the party to be bound. This can be a formal contract, a signed letter, an email with an electronic signature, or even a napkin sketch with the essential terms and a signature can suffice in some cases. The writing must include the essential terms of the deal: the parties, subject matter, and material terms like price or duration.
What Happens Without a Writing?
If a contract falls within the statute of frauds and isn't in writing, it's generally unenforceable meaning a court won't force either party to perform. There are exceptions, though. Partial performance, reliance (promissory estoppel), or admission of the contract's existence in court can sometimes allow enforcement even without a signed writing.
The Takeaway
If you're entering an agreement involving real estate, goods over $500, a long-term commitment, or a promise to cover someone else's debt, don't rely on a verbal understanding. Put it in writing and get it signed. It's a small step that can save significant legal headaches down the road.
This post is for general informational purposes only and does not constitute legal advice. Consult a licensed attorney regarding your specific situation.