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110
Samuel Goldwyn
I. Teacher to Teacher Dialogue
1. First, which categories of contracts are covered by the Statute of Frauds, including the
contracts covered by the statute.
3. Finally, because the bottom line is to make sure that equity is done, explain both the
public policy and practical necessity of having exceptions to the parol evidence rule.
The second set of defenses to the enforcement of contracts revolves around writing
requirements associated with certain contracts. The genesis of the writing requirement for certain
contracts is found in two roots: one historical and one practical. The historical root goes back to
early English common law as developed under William the Conqueror and his successors. Status
do with knights in shining armor and more with practicality. A writing is considered the best and
most neutral evidence of the parties’ intent at the time the agreement was entered into. The
The English version of the Statute of Frauds has been carried over to our legal system
virtually intact. All U.S. states have adopted their own versions of the statute, and they are
STATUTE OF FRAUDS AND
EQUITABLE EXCEPTIONS
14
Statute of Frauds and Equitable Exceptions
Once you have decided the contract is covered, what are the effects of having failed to reduce
it to writing? Several possibilities may occur at this juncture. The parties may proceed to
voluntarily perform the contract. But if one or both decide to assert the statute, its teeth are found
Once the contract is finally reduced to writing, the next element of the Statute of Frauds takes
hold: the parol evidence rule and the exceptions to it. Think of the parol evidence rule as being
similar to Janus, the figure from Roman mythology, who was the guardian of portals and patron
of beginnings and endings. He faced both ways at once, symbolizing his power to let in or keep
The converse is found in the exceptions to the parol evidence rule. Long ago, an anonymous
legal scholar first said: “The Statute of Frauds should not be used to perpetuate frauds.” The
exceptions to the parol evidence rule are designed to let in additional information not shown on
the original writing in certain limited circumstances. These special circumstances are grounded in
The second area of exception to the parol evidence rule is explaining ambiguities. If the
contract, as written, contains ambiguous language, parol evidence is allowable to clear the
ambiguity as long as it is consistent with the original terms. The nature of the evidence allowable
II. Chapter Objectives
1. List the contracts that must be in writing under the Statute of Frauds.
2. Explain the effect of noncompliance with the Statute of Frauds.
III. Key Question Checklist
Does the contract in question come under the writing requirements of the Statute of Frauds?
Is there an exception to the writing requirement?
Chapter 14
IV. Text Materials
Statute of Frauds for Common Contracts
Each state has enacted a Statute of Frauds requiring that certain types of contracts to be in
Writing Requirement – Most states require that any contracts involving real estate or the
purchase of a business, contracts for a term greater than one year, promises to stand for the debt
of another, contracts for the sale of goods over $500, and contracts to pay compensation for
Critical Legal Thinking – The Statute of Frauds allows for consistency in handling written vs.
Contracts Involving Interests in Real Property – All contracts that transfer interests in
One-Year Rule – This rule requires that contracts that cannot be performed within one year be in
writing.
Ethics: Bonus Lost Because of the Statute of Frauds
Sawyer worked as a paralegal for Melbourne Mills, Jr. an attorney at a law firm. Sawyer
proposed that Mills and the law firm become engaged in class action lawsuits. She was promised
an unspecified bonus when “the ship comes in.” After some fairly large settlements, Mills agreed
As per ethics, Mills should honor his oral agreement with Sawyer. The Statute of Frauds
Guaranty Contract – When one person agrees to answer for the debt of another, they enter into
writing.
Case 14.1 Guaranty Contract: Page v. Gulf Coast Motors
903 So.2d 148, 2004 Ala. Civ. App. Lexis 982 (2004), Court of Civil Appeal of Alabama
Statute of Frauds and Equitable Exceptions
therefore unenforceable.
Ethics Questions: A guaranty contract occurs when one person agrees to stand for the debt of
another. The Statute of Frauds requires this to be in writing.
be enforced.
Agent’s Contracts – The equal dignity rule requires an agent’s contract to be in writing if they
are to be enforced.
UCC Statutes of Fraud
UCC: Contract for the Sale of Goods – Section 2-201(1) of the UCC requires that the sale of
goods costing over $500 must be in writing. If a modification to a contract increases the sales
did not have to be.
UCC: Contract for the Lease of Goods – Section 2A-201(1) of the UCC is the Statute of Frauds
provision that applies to the lease of goods. It states that lease contracts involving payments of
$1,000 or more must be in writing.
Equitable Exception: Part Performance
Ethics: Equity Saves an Oral Agreement for the Purchase of Real Estate
The Warners obtained a loan on an inherited piece of property, and convinced the Suttons to
purchase the property. It was orally agreed that the Suttons would make all mortgage payments
and pay the taxes on the property and they would be able to complete the purchase anytime over
partially performed, and it is impossible to return the parties to status quo, specific performance
can be applied by the court. The Warners did not act ethically in this case.
Formality of the Writing
Chapter 14
Required Signature – The contract must be signed by the party against whom enforcement is
Interpreting Contract Words and Terms – If terms in a contract are not defined, and no
glossary section is attached, the courts will apply standards of interpretation. Ordinary words are
given the definitions stated in dictionaries and technical words are given their technical meaning,
unless something else is clearly intended. Specific terms qualify general terms. Usage of trade
Parol Evidence Rule
Written contracts are considered to be a complete and final integration of the statements of the
parties, and any prior or contemporaneous oral evidence that will alter, contradict, or amend the
written contract is inadmissible.
Exceptions to the Parol Evidence Rule – Parol evidence may be admitted in court to show that
Partnership
834 N.E.2d 1233, 2005 Mass. App. Lexis 904 (2005), Appeals Court of Massachusetts
Facts: Yarde Metals, Inc. (Yarde) was a season ticket holder to New England Patriots
professional home football games. Yarde permitted a business associate to attend a Patriots game
Issue: Does Yarde have an implied right to purchase Patriots’ season tickets?
Decision: The appeals court affirmed the trial court’s dismissal of Yarde’s case. The ticket
specifically stated that “purchase of season tickets does not entitle purchaser to renewal in a
subsequent year.” Parol evidence is not generally admissible to vary the unambiguous terms of
Statute of Frauds and Equitable Exceptions
over the contract.
Ethics: Since the Patriots’ written contract with season ticket holders expressly provided that the
Equitable Exception: Promissory Estoppel
V. Key Terms and Concepts
Agent’s contract—A contract related to the selling of real property that needs to be in writing.
owning or leasing it.
Equal dignity rule—A rule that says that agent’s contracts to sell property covered by the
Statute of Frauds must be in writing to be enforceable.
Executory contract—A contract that is not in writing.
Glossary—It defines many of the words and terms used in the contract.
container.
Incorporation by reference—When integration is made by express reference in one document
that refers to and incorporates another document within it.
Integration of several writings—The combination of several writings to form a single
contract.
and lease contracts.
Life estate—An interest in the land for a person’s lifetime; upon that person’s death, the
interest will be transferred to another party.
Main purpose or leading object exception—If the main purpose of a transaction and an oral
collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does
One-year rule—An executory contract that cannot be performed by its own terms within one
year of its formation must be in writing.
Original contract—It is the first contract between the debtor and the creditor.
Chapter 14
regarding a dispute over the contract.
Parol evidence—Any oral or written words outside the four corners of the written contract.
Part performance—An equitable doctrine that allows the court to order an oral contract for
the sale of land or transfer of another interest in real property to be specifically performed if it
has been partially performed and performance is necessary to avoid injustice.
reliance on the offer.
Real property—The land itself as well as buildings, trees, soil, minerals, timber, plants, crops,
and other things permanently affixed to the land.
Rescind—Revoking a contract
Sales contracts—Contracts for the sale of goods.
Statute of Frauds—State statute that requires certain types of contracts to be in writing.
UCC Statute of Frauds—A rule that requires all contracts for the sale of goods costing $500
or more and lease contracts involving payments of $1,000 or more to be in writing.
sales and lease of goods.
