Book Opener

The Statute ofFraudsl How to explain thepurpose of the Statuteof Fraudsl How to explain thelegal status of acontract that is not inwritingl How to identify theelements that must beincluded in a writtencontractl How to deal withcontradictory andambiguous terms in awritten agreementl How to identify whichcontracts must be inwritingUnderstanding whichcontracts must be inwriting, as well as theelements of a writing, willhelp you avoid pitfallsassociated with theStatute of Frauds.l breach of contractl perjuryl Statute of Fraudsl memoranduml goodsl real propertyPurpose of a WritingIn early England contracts did not necessarily have to be written tobe fully enforceable. Persons could be brought to trial for breach ofwritten or oral contracts. A breach of contract is a wrongful failure toperform one or more promises of a contract. The accused could not testifyon his or her behalf, however. Only persons who were not parties to thecontract could be witnesses in court. To protect their friends or their owninterests, witnesses often made false statements under oath in court.Making such false statements is called perjury and is a crime.To discourage such practices, the English Parliament passed a specialstatute in 1677. It required certain contracts to be evidenced by awriting to be enforceable. This statute, entitled an “Act for the Preventionof Frauds and Perjuries,” became known as the Statute of Frauds.A better name might be the Statute of Writings, however, because thestatute states that certain contracts must be in writing.Most states in the United States now have a Statute of Frauds ,which are state laws requiring that certain contracts be evidenced by awriting. We commonly say such contracts must be “in writing.” Puttinga contract in writing can help to clarify an agreement for both partiesand for the courts, if necessary.Elements of a WritingA writing need not be formal to satisfy the Statute of Frauds. Thewritten evidence of an agreement is known as a memorandum . It mayconsist of such things as a letter, a sales slip, an invoice, a telegram, orwords written on a check. The writing should typically identify the place,date, involved parties, subject matter, price and terms, and intent of theparties. It should also contain the signature of the party who may becharged on the agreement. See Figure 10.1 for a sample memorandum.Example 1. In The Opening Scene, Viktor agreed to buy Keith’scar for $1,500. On his deposit check for $500, Viktor wrote,“Down payment on 1987 convertible. Total price $1,500.” Keithsigned the back of the check and put it in his bank account.Although Keith later told Viktor he wanted $2,000 for the car, acourt would hold that the oral contract for $1,500 was enforceablebecause the words on the check satisfied the requirementsof a written agreement.206 Unit 2: Entering Into Contracts