| Contract law |
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| Formation |
| Defences |
| Interpretation |
| Dispute resolution |
| Rights of third parties |
| Breach of contract |
| Remedies |
| Quasi-contractual obligations |
| Duties of parties |
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| Related areas of law |
| By jurisdiction |
| Other law areas |
| Notes |
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A statute of frauds is a form of statute requiring that certain kinds of contracts be memorialized in writing, signed by the party against whom they are to be enforced, with sufficient content to evidence the contract. [1] [a]
The term statute of frauds comes from the Statute of Frauds, an act of the Parliament of England (29 Chas. 2 c. 3) passed in 1677 (authored by Lord Nottingham assisted by Sir Matthew Hale, Sir Francis North and Sir Leoline Jenkins [2] and passed by the Cavalier Parliament), the long title of which is: An Act for Prevention of Frauds and Perjuries. [3]
Many common law jurisdictions have made similar statutory provisions, while a number of civil law jurisdictions have equivalent legislation incorporated into their civil codes. The original English statute itself may still be in effect in a number of Canadian provinces, depending on the constitutional or reception statute of English law, and any subsequent legislative developments.[ citation needed ]
The statute of frauds typically requires a signed writing in the following circumstances: [4]
In an action for specific performance of a contract to convey land, the agreement must be in writing to satisfy the statute of frauds. The statute is satisfied if the contract to convey is evidenced by a writing or writings containing the essential terms of a purchase and sale agreement and signed by the party against whom the contract is to be enforced. If there is no written agreement, a court of equity can specifically enforce an oral agreement to convey only if the part performance doctrine is satisfied. In most jurisdictions, part performance is proven when the purchaser pays the purchase price, has possession of the land and makes improvements on the land, all with the permission of the seller. No jurisdiction is satisfied by payment of the purchase price alone. [5]
Under common law, the statute of frauds also applies to contract modifications. For example, in an oral agreement for the lease of a car for nine months, immediately after taking possession, the lessor then decides that he really likes the car and makes an oral offer to the lessee to extend the term of the lease by an additional six months. Although neither agreement alone comes under the statute of frauds, the oral extension modifies the original contract to make it a fifteen-month lease (nine months plus the additional six), thereby bringing it under the statute as the contract now exceeds twelve months in duration. In theory, the same principle works in reverse as well, such that an agreement to reduce a lease from fifteen months to nine months would not require a writing. However, many jurisdictions have enacted statutes that require a writing for such situations.
A defendant in a contract case who wants to use the statute of frauds as a defense must raise it as an affirmative defense in a timely manner. [6] The burden of proving that a written contract exists comes into play only when a statute of frauds defense is raised by the defendant.
An agreement may be enforced even if it does not comply with the statute of frauds in the following situations:
The Statute of Frauds recites that it was enacted for the ". . . prevention of many fraudulent practices which are commonly endeavored to be upheld by perjury . . .". The mischief arising from claimants asserting oral agreements was to be avoided by requiring that certain contracts be evidenced by "some memorandum or note thereof . . . in writing and signed by the party to be charged therewith . . .". Contracts respecting land "created by livery and seisen only or by parole" would not be enforced absent such a writing. [9] [ citation needed ]
It quickly became apparent to the common law judges that the Statute might itself become an instrument of fraud (or at least injustice) if it was strictly enforced with respect to contracts that were wholly or partly performed. [10]
The courts developed the concept of "part performance" as an exception. If a contract concerning land was partly performed, that could displace the need for a note or memorandum in writing signed by the party to be charged.
It was one thing to create an exception that displaced the need for a memorandum in writing, but something else to completely nullify the Statute's operation. The thrust of the Statute was that contracts concerning land could not be proved by parol evidence alone. Thus, part performance might be an exception, but it could not, in effect, mean that the underlying contract could be proven by parol evidence. In developing the "part performance" exception, a balancing of the competing considerations was required. An important factor in the case law became that the part performance must be "unequivocally" related to the alleged contract. [11]
The Statute of Frauds, sub-titled "An Act for Prevention of Frauds and Perjuries", was passed in 1695 in Ireland. [12] The statute took effect "from and after the feast day of the nativity of St. John Baptist [24 June], which shall be in the year of our Lord one thousand six hundred ninety-six", [12] and is one of the few pre-Independence laws that survived the Statute Law Revision (Pre-1922) Act 2005 and the Statute Law Revision Act 2007. It remains largely in force today.
Some effects of the law have been softened by equity, for example the requirement that all contracts for sale of land be evidenced in writing can be circumvented by reliance on the doctrine of part performance.
| Mercantile Law Amendment Act 1856 | |
|---|---|
| Act of Parliament | |
 | |
| Long title | An Act to amend the Laws of England and Ireland affecting Trade and Commerce. |
| Citation | 19 & 20 Vict. c. 97 |
| Dates | |
| Royal assent | 29 July 1856 |
| Other legislation | |
| Amended by | Bills of Exchange Act 1882 |
Status: Amended | |
| Text of statute as originally enacted | |
| Revised text of statute as amended | |
| Text of the Mercantile Law Amendment Act 1856 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk. | |
The Statute of Frauds, dating from 1677, [b] was largely repealed in England and Wales by the Law Reform (Enforcement of Contracts) Act 1954 (2 & 3 Eliz. 2. c. 34). The only provision of it extant is part of Section 4 [13] which means that contracts of guarantee (surety for another's debt) are unenforceable unless evidenced in writing. This requirement is clarified by section 3 of the Mercantile Law Amendment Act 1856 (19 & 20 Vict. c. 97), [14] dated 29 July 1856, which provides that the consideration for the guarantee need not appear in writing or require any necessary inference from a written document. [14]
Section 6 [15] of the Statute of Frauds Amendment Act 1828 [c] (9 Geo. 4. c .14) (commonly known as Lord Tenterden's Act) [16] was enacted to prevent Section 4 being circumvented by bringing an action against a verbal guarantor for the tort of deceit (the tort in Freeman v. Palsey). [17] A common summary of the law is "a verbal guarantee (for a debt) isn't worth the paper it is written on".[ citation needed ]
Provisions in section 4 as to formalities for contracts for the sale of land were repealed by Schedule 7 to the Law of Property Act 1925 (15 & 16 Geo. 5. c. 20), however the requirement that contracts for the sale of land be evidenced in writing was maintained by section 40 of that Act, [18] subsequently replaced by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34). [19]
Section 6 of the Mercantile Law Amendment Act Scotland 1856 [20] was derived from those parts of section 4 of the Statute of Frauds (1677) which relate to contracts of guarantee and from section 6 of the Statute of Frauds Amendment Act 1828.
It was repealed on 1 August 1995 [21] [22] by the Requirements of Writing (Scotland) Act 1995, sections 14(2) [23] and Schedule 5 [24] (with ss. 9(3)(5)(7), 13, 14(3)).
In the United States, for contracts for the sale of goods that fall under the Uniform Commercial Code, additional exceptions may apply:
Every state has a statute that requires certain types of contracts to be in writing and signed by the party to be charged. The most common requirements are for contracts that involve the sale or transfer of land, and contracts that cannot be completed within one year. [29] When the statute of frauds applies, a typical statute requires that the writing commemorating the agreement identify the contracting parties, recite the subject matter of the contract so that it is reasonably identifiable, and include the important terms and conditions of agreement.
The statute of frauds in various states comes in three types:
Colorado has a number of different statutes of frauds applicable to different areas of law. [32]
In addition to the statute of frauds as conventionally defined, [e] the State of Texas has two rules that govern the litigation process, each of which also has the character of a statute of frauds. One is a rule of general applicability and requires agreements between counsel (or a party, if self-represented) to be in writing to be enforceable. Tex. R. Civ. P. 11. [f]
Agreements under Texas Rule of Civil Procedure 11 are called "Rule 11 Agreements" and may either concern settlement or any procedural aspect, such as an agreement regarding scheduling, continuances of trial settings, or discovery matters. The rule has existed since 1840 and has contained the filing requirement since 1877. [33] The number designation can cause confusion to non-Texas attorneys because the federal rule 11 is the sanctions rule, whose state-court counterpart has the number designation 13 under the Texas Rules of Civil Procedure (TRCP).
The other rule that is in the nature of a statute of frauds governs fee agreements with clients when the attorney is to be compensated based on the outcome of the case. The Texas Government Code requires that "[a] contingent fee contract for legal services must be in writing and signed by the attorney and client." TEX. GOV'T CODE ANN. § 82.065(a). [34]
The classic example is a contingent fee contract in a personal injury case that provides for the claimant's lawyer to receive a certain percentage of the settlement amount (or of the amount awarded by judgment) net of litigation costs, with the percentages typically staggered and increasing based on whether a settlement was obtained before lawsuit is filed, after a lawsuit was filed but before trial, or whether a judgment favorable to the client was obtained through trial. The other scenario is a contingency fee contract based on cost savings achieved (for a client who is a defendant sued for a money judgment) or based on other specified litigation objectives. In those cases, the client will not recover any money from his opponent in the lawsuit, and will have to pay his attorney from his or her own funds in accordance with the terms of the agreement, once the matter is concluded favorably. When the client does not pay, some attorneys then sue the client on the contingency fee contract, or in quantum meruit in the alternative. See, e.g., Shamoun & Norman, LLP v. Hill, 483 S.W.3d 767 (Tex. App.-Dallas 2016), reversed on other grounds by Hill v. Shamoun & Norman, LLP, No. 16-0107 (Tex. April 13, 2018). [35] The attorney-vs-client fee-dispute issue generally does not arise in personal injury cases because the settlement funds from the settling party or judgment-debtor are disbursed through the attorney of the party entitled to them, net of costs and the contingency fee component.
In addition to general statutes of frauds, under Article 2 of the Uniform Commercial Code (UCC), every state except Louisiana has adopted an additional statute of frauds that relates to the sale of goods. Pursuant to the UCC, contracts for the sale of goods where the price equals $500 or more fall under the statute of frauds, with the exceptions for professional merchants performing their normal business transactions, and for any custom-made items designed for one specific buyer. [36]
The application of the statute of frauds to dealings between merchants has been modified by provisions of the UCC. There is a "catch-all" provision in the UCC for personal property not covered by any other specific law, [37] stating that a contract for the sale of such property where the purchase price exceeds $500 is not enforceable unless memorialized by a signed writing. The most recent UCC revision increases the triggering point for the UCC Statute of Frauds to $5,000, but states have been slow to amend their versions of the statute to increase the trigger point.
For purposes of the UCC, 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 statute of frauds as a defense. However, a statute of frauds defense may still be available under a state's general statute.
With respect to securities transactions, the Uniform Commercial Code has abrogated the statute of frauds. [38] 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 USA PATRIOT Act was a landmark Act of the United States Congress, signed into law by President George W. Bush. The formal name of the statute is the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, and the commonly used short name is a contrived acronym that is embedded in the name set forth in the statute.
The Uniform Commercial Code (UCC), first published in 1952, is one of a number of uniform acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through UCC adoption by all 50 states, the District of Columbia, and the Territories of the United States.
A prenuptial agreement, antenuptial agreement, or premarital agreement, is a written contract entered into by a couple before marriage or a civil union that enables them to select and control many of the legal rights they acquire upon marrying, and what happens when their marriage ends by death or divorce. Couples enter into a written prenuptial agreement to supersede many of the default marital laws that would otherwise apply in the event of divorce, such as the laws that govern the division of property, retirement benefits, savings, and the right to seek alimony with agreed-upon terms that provide certainty and clarify their marital rights. A premarital agreement may also contain waivers of a surviving spouse's right to claim an elective share of the estate of the deceased spouse.
The Securities Act of 1933, also known as the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, and the '33 Act, was enacted by the United States Congress on May 27, 1933, during the Great Depression and after the stock market crash of 1929. It is an integral part of United States securities regulation. It is legislated pursuant to the Interstate Commerce Clause of the Constitution.
The Statute of Frauds (1677) was an act of the Parliament of England. It required that certain types of contracts, wills, and grants, and assignment or surrender of leases or interest in real property must be in writing and signed to avoid fraud on the court by perjury and subornation of perjury. It also required that documents of the courts be signed and dated.
The Investment Advisers Act of 1940, codified at 15 U.S.C. § 80b-1 through 15 U.S.C. § 80b-21, is a United States federal law that was created to monitor and regulate the activities of investment advisers as defined by the law. Passing unanimously in both the House and Senate, it is the primary source of regulation of investment advisers and is administered by the U.S. Securities and Exchange Commission.
A guarantee is a form of transaction in which one person, to obtain some trust, confidence or credit for another, agrees to be answerable for them. It may also designate a treaty through which claims, rights or possessions are secured. It is to be differentiated from the colloquial "personal guarantee" in that a guarantee is a legal concept which produces an economic effect. A personal guarantee, by contrast, is often used to refer to a promise made by an individual which is supported by, or assured through, the word of the individual. In the same way, a guarantee produces a legal effect wherein one party affirms the promise of another by promising to themselves pay if default occurs.
Assignment is a legal term used in the context of the laws of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. An assignment may not transfer a duty, burden or detriment without the express agreement of the assignee. The right or benefit being assigned may be a gift or it may be paid for with a contractual consideration such as money.
Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).
The pre-existing duty rule is an aspect of consideration within the law of contract. Originating in England the concept of consideration has been adopted by other jurisdictions, including the US.
In the law, a seal affixed to a contract or other legal instrument has had special legal significance at various times in the jurisdictions that recognise it. In the courts of common law jurisdictions, a contract which was sealed was treated differently from other written contracts, although this practice gradually fell out of favour in most of these jurisdictions in the 19th and early 20th century. The legal term seal arises from the wax seal used throughout history for authentication.
Canadian contract law is composed of two parallel systems: a common law framework outside Québec and a civil law framework within Québec. Outside Québec, Canadian contract law is derived from English contract law, though it has developed distinctly since Canadian Confederation in 1867. While Québecois contract law was originally derived from that which existed in France at the time of Québec's annexation into the British Empire, it was overhauled and codified first in the Civil Code of Lower Canada and later in the current Civil Code of Quebec, which codifies most elements of contract law as part of its provisions on the broader law of obligations. Individual common law provinces have codified certain contractual rules in a Sale of Goods Act, resembling equivalent statutes elsewhere in the Commonwealth. As most aspects of contract law in Canada are the subject of provincial jurisdiction under the Canadian Constitution, contract law may differ even between the country's common law provinces and territories. Conversely; as the law regarding bills of exchange and promissory notes, trade and commerce, maritime law, and banking among other related areas is governed by federal law under Section 91 of the Constitution Act, 1867; aspects of contract law pertaining to these topics are harmonised between Québec and the common law provinces.
Buffaloe v. Hart, 114 N.C. App. 52 (1994) was a North Carolina Court of Appeals case dealing with a breach of contract.
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of those at a future date. The activities and intentions of the parties entering into a contract may be referred to as contracting. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or equitable remedies such as specific performance or rescission. A binding agreement between actors in international law is known as a treaty.
Daulia Ltd v Four Millbank Nominees Ltd [1977] is an English contract law case, concerning unilateral contracts, and when embarking on the performance of an act for which an offer is open, at what point the offer may be withdrawn. In particular, Goff LJ observed that there would be a duty to not prevent full performance of terms in a unilateral offer, once performance had begun.
Contract law regulates the obligations established by agreement, whether express or implied, between private parties in the United States. The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law.
The Law of Property Act 1989 is a United Kingdom act of Parliament, which laid down a number of significant revisions to English property law.
The Fraud Enforcement and Recovery Act of 2009, or FERA, Pub. L. 111–21 (text)(PDF), S. 386, 123 Stat. 1617, enacted May 20, 2009, is a public law in the United States enacted in 2009. The law enhanced criminal enforcement of federal fraud laws, especially regarding financial institutions, mortgage fraud, and securities fraud or commodities fraud.
Formalities in English law are required in some kinds of transaction by English contract law and trusts law. In a limited number of cases, agreements and trusts will be unenforceable unless they meet a certain form prescribed by statute. The main kinds of formality that a statute can require are to put the transaction in writing, to make a deed, or to register it at a government registrar.
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