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.
Terminology 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 and passed by the Cavalier Parliament), the long title of which is: An Act for Prevention of Frauds and Perjuries.'Charles II, 1677: An Act for prevention of Frauds and Perjuryes.', Statutes of the Realm: volume 5: 1628-80 (1991), pp. 839-42.
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.
Application The statute of frauds typically requires a signed writing in the following circumstances:Restatement (Second) of Contracts §110. Contracts in consideration of marriage. This provision covers prenuptial agreements. Contracts that cannot be performed within one year. However, contracts of indefinite duration do not fall under the statute of frauds regardless of how long the performance actually takes. Contracts for the transfer of an interest in land. This applies not only to a contract to sell land but also to any other contract in which land or an interest in it is disposed, such as the grant of a mortgage or an easement. Contracts by the executor of a will to pay a debt of the estate with his own money. Contracts in which one party becomes a surety (acts as guarantor) for another party's debt or other obligation. Contracts for the sale of goods totaling $500.00 or more. 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.Restatement (Second) of the Law of Contracts § 129. American Law Institute.
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.
Raising the defense 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. The burden of proving that a written contract exists comes into play only when a statute of frauds defense is raised by the defendant.
Exceptions An agreement may be enforced even if it does not comply with the statute of frauds in the following situations: A statute of frauds defense may also be affected by a showing of part performance by proving the existence of one of two different conditions. If the parties have taken action in reliance on the agreement, as in the case Riley v. Capital Airlines, Inc., the court held that part performance does not take an executory portion of a contract out of the statute of frauds. Each performance constitutes a contract that falls outside the Statute of Frauds and was enforceable to the extent it is executed. However, the unexecuted portion of the contract falls within the Statute of Frauds and is unenforceable. As a result, only the executed portion of the contract can be recovered, and the doctrine of part performance does not remove the contract from the statute. On the other hand, the court, in Schwedes v. Romain, held that partial performance and grounds for estoppel can make the contract effective. Promissory estoppel can be applied in many but not all jurisdictions when the charging party detrimentally relies on the otherwise unenforceable contract. In England and Wales, the circumstances where promissory estoppel may be used to overcome the statute are limited, and some jurisdictions deny this possibility altogether. The "main purpose rule" as it relates to guarantee or suretyship type contracts: where the promisor's promise to answer for the debt of another is made mainly for the promisor's own economic advantage, then it is a primary promise, and enforceable even without a writing. Easements by implication: easements, which are agreements that permit the use of real estate by someone who has no property interest in the land, may be created by operation of law rather than by written instrument. This may happen where, for example, a piece of land is partitioned between owners and pre-existing utilities routes or access paths that would otherwise be trespassory over one of the plots is reasonably necessary for enjoyment of the other plot. In such case, the pre-existing use must be apparent and continuous at the time of the partition for an easement to be created by implication. The implied easement constitutes an interest in land that does not require a writing to be enforceable.
By jurisdiction
Canada 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.
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.
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.Deglman v Guaranty Trust Co. of Canada and Constantineau, S.C.R. 725 https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2738/index.do
Ireland The Statute of Frauds, sub-titled "An Act for Prevention of Frauds and Perjuries", was passed in 1695 in Ireland. 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", 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.
United Kingdom England and Wales
The Statute of Frauds, dating from 1677, 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 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), 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.
Section 6 of the Statute of Frauds Amendment Act 1828 (9 Geo. 4. c .14) (commonly known as Lord Tenterden's Act)Clerk and Lindsell on Torts, 16th Edition, 1989, Sweet and Maxwell, paragraph 18-41, at page 1036 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).(1789) 3TR 51 A common summary of the law is "a verbal guarantee (for a debt) isn't worth the paper it is written on".
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, subsequently replaced by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34).
Scotland Section 6 of the Mercantile Law Amendment Act Scotland 1856 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 by the Requirements of Writing (Scotland) Act 1995, sections 14(2) and Schedule 5 (with ss. 9(3)(5)(7), 13, 14(3)).
United States
In the United States, for contracts for the sale of goods that fall under the Uniform Commercial Code, additional exceptions may apply: Admission of the existence of a contract by the defendant under oath.U.C.C. 2-201(3)(b) However, the contract would only exist for the quantity of goods that were admitted. For instance, if the contract was for 100 televisions but the seller admitted in court that it was for 70 televisions, then the contract would exist only for 70 televisions and not the original 100. Merchant confirmation rule. If one merchant sends a writing sufficient to satisfy the statute of frauds to another merchant and the receiving merchant has reason to know of the contents of the sent confirmation and does not object to the confirmation within 10 days, the confirmation is good to satisfy the statute as to both parties, even if the confirmation was not signed by the party to be charged.U.C.C. 2-201(2)