Oral contracts may be binding in some cases, but in the US, the statute of fraud requires certain agreements to be in writing. This includes marriage contracts, land transfers, and contracts involving property sales. The contract must include all parties’ names, the purpose of the agreement, and the terms agreed upon. All parties must sign the contract, except in the case of UCC-covered goods. Contracts voidable under the statute may still be performed if partial performance has occurred or if dealing with specially manufactured goods.
In some cases, oral agreements are binding and enforceable. In the United States, however, there are numerous instances where oral contracts are unacceptable. This is due to the statute of fraud, which is a component of contract law that requires certain agreements to be in writing.
The statute of frauds can serve a number of purposes. It was primarily designed to offer protection against fraudulent acts. Requiring contracts to be in writing can also help ensure that all parties are aware of all the terms of their agreements. Also, requiring contracts to be in writing can help the courts reach a decision in disputes over the violation of certain contractual terms.
The types of agreements subject to this statute may vary. There are some that are common, however. These include marriage contracts, land transfers and contracts involving the sale of property which are governed by the Uniform Commercial Code (UCC).
The statute of fraud requires more than just written contracts. It also dictates elements that must be included in such contracts. In general, all parties to the agreement must be named. This can include both primary parties, such as buyers and sellers, and secondary parties, such as lenders and distributors.
A contract adhering to the statute of fraud must outline the purpose of the written agreement. It should clearly outline the terms that the contracting parties are agreeing to. The statute of fraud also requires that all parties to an agreement must have signed it.
For example, consider that there is an agreement between a buyer and a seller for a piece of land. In this example, the buyer signs the contract, but the seller doesn’t. The seller generally cannot take action against the buyer if he does not purchase the property, although the buyer’s signature shows his initial agreement to the transaction. An exception to this requirement is when the contract involves the sale of goods covered by the UCC. The UCC says that only the party disputing the contract must have signed the agreement.
It is understood that the statute of frauds does not act to invalidate contracts. Instead, the statute outlines the situations in which a contract may be voidable. The difference is that a contested agreement is not automatically unenforceable because some aspect of the fraud statute was not followed. There are cases where contracts voidable under the statute of fraud can be performed.
This can happen when partial performance has occurred. This means that one or more parties have already taken certain actions that acknowledge the existence of an agreement. Contracts that do not meet the rules of the Fraud Act can also be performed when dealing with specially manufactured goods. Such a situation could arise if a restaurant orders a tailor to customize the uniforms with the restaurant’s logo and then tries to back out of the deal. Allowing the restaurant to be exempted from the settlement due to the fraud statute is generally considered grossly unfair to the tailor.
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