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Statute of Frauds

On Behalf of | Feb 28, 2023 | Firm News

How important is it for you to put your contract in writing? Very important for some contracts. Section 2-201 of the Uniform Commercial Code, otherwise known as the Statute of Frauds, details what types of contracts must be in writing, or else they are null and void.

As the name suggests, the Statute of Frauds is intended to prevent fraud. It requires that some contracts be written to be enforceable, especially contracts that have to do with high monetary value or large purchases and transfers. In other words, some contracts have to be in writing, or they mean nothing. This could put you in a situation where there’s nothing you can do if the other person doesn’t follow through with their side of the bargain.

While many contracts are enforced even when not in writing, if the type of contract is listed in the Statute of Frauds, it must be written. Some of the most important contracts covered by the Statute of Frauds are:

  • Sale of goods worth more than $500 – “I’m buying a new piece of equipment for my business, with a value of $800.”
  • Contracts for the sale of land – “I want to buy this property so I can build my business on it.”
  • Contracts that can’t be performed within one year – “I want to purchase a two-year cable TV package.”
  • Sureties – “Someone else will pay off my business’ loan to the bank if I default.”

Satisfying the Statute of Frauds requires that the contract contain, at least:

  • The signature of the party against whom the contract is being enforced,
  • A clear identification of the parties and the subject matter, and
  • The essential terms of the contract.

Each of these components has to be present in writing, or the contract could be declared unenforceable and void in a court of law.

Talk with an attorney today to avoid potential future disputes over the enforceability of your contracts. A contract that would have otherwise been valid, had it been in writing, could be found to be completely unenforceable by a court of law if these requirements are not met, so you always want to have an attorney protect you.