The statute of frauds
refers to a requirement in many common law
jurisdictions that certain kinds of transactions,
typically contractual obligations, be evidenced
by a writing signed by the party against whom
enforcement is sought, or by the party's
authorized agent. The term comes from an English
statutory law (29 Car. II c. 3) passed in 1677.
It is more properly called the Statute of
Frauds and Perjuries.
The writing that the Statute requires is a
precondition to maintaining a suit for breach of
contract (or other obligation). However, the
Statute is used as a defense, which defense is
waived if the person against whom enforcement is
sought fails to raise in a timely manner. Thus,
the burden of showing evidence that such a
writing exists only comes into play when a
Statute of Frauds defense is raised by the
defendant. A defendant who admits the existence
of the contract in his pleadings, under oath in a
deposition or affidavit, or at trial, may not use
the defense.
Traditionally, the statute of frauds requires a
writing signed by the party against whom
enforcement is sought in the following
circumstances:
* Contracts in consideration of marriage
* Contracts which cannot be performed within one
year
* Contracts for the sale of land
* Contracts by the executor of a will to pay a
debt of the estate with his own money
* Under the Uniform Commercial Code, contracts
for the sale of goods where the price exceeds
$500.00
* Contracts in which one party becomes a surety
(acts as guarantor) for another party's debt or
other obligation.
Law students often remember these circumstances
by the mnemonic "MYLEGS" (marriage,
year, land, executor, goods, surety).
Uniform Commercial Code section 1-206 also sets
out a "catch-all" statute of frauds for
personal property not covered by any other
specific law, stating that a contract for the
sale of such property where the purchase price
exceeds $5,000.00 is not enforceable unless
memorialized by a signed writing. This section,
however, is rarely invoked in litigation.
Interestingly, with respect to securities
transactions, the Uniform Commercial Code
(section 8-113) has abrogated the statute of
frauds. The drafters of the most recent revision
commented that "with the increasing use of
electronic means of communication, the statute of
frauds is unsuited to the realities of the
securities business."
The Statute of Frauds also applies to modified
contracts - for example, suppose party A makes an
oral agreement to lease a house from party B for
9 months. Immediately after taking possession
party A decides that he really likes the place,
and makes an oral offer to party B to extend the
term of the lease by 6 months. Although neither
agreement alone comes under the Statute of
Frauds, the extension modifies the original
contract to make it a 15-month lease, thereby
bringing it under the Statute. In practice, this
works in reverse as well - an agreement to reduce
the lease from 15 months to 9 months would not
require a writing. However, almost all
jurisdictions have enacted statutes that require
a writing in such situations.
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