1.4 The Statute of Frauds Copy

Although, for the most part, contracts may be either oral or in writing, there are certain situations which require written contracts.    Note that The Statute of Frauds has nothing to do with the concept of fraud (intention to mislead) but only refers to contracts that must be in writing to be enforceable.

  1. All real estate contracts must be in writing.
  2. Any agreement that cannot be fully performed within one year. As an example, a consulting contract for a term of 18 months must be in writing.
  3. Any agreement to guarantee another’s debts must be in writing.  An example would include the guarantee of a bank loan made on behalf of one’s child or company. The lender doesn’t necessarily have to sign but the guarantor does.
  4. Agreements for the sale of goods for $500 or more must be in writing (unless the goods are specially made for the buyer). The requirement for a written contract also holds true for sales of intangibles over $5,000 such as copyrights or patents.

Important! It is very likely that you will get a question on the Statute of Frauds on your IQEX Exam.

Please answer the questions below and review your answers.

Try these questions before reading the paragraph that follows

Note an important concept with reference to question 18:  If you can find an exception to a statement, it isn’t the correct answer.  a) Not all contracts over $500 must be in writing- just goods. b) In the case of a guarantee, the lender need not sign. c) The Statute of Frauds applies to contracts that cannot be performed within one year. d) Must be the right answer by the process of elimination. Common sense indicates this is true.  For example, if I sell my business, I would probably sign a non-competition agreement at the same time which is contained in a second document. 

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