Statute of Frauds: Which Contracts Must Be in Writing

The statute of frauds is a rule that certain kinds of contracts are not enforceable unless there is a written record signed by the person against whom enforcement is sought. Most contracts can be oral. The statute singles out a handful of categories, most importantly contracts to sell land, contracts that cannot be performed within one year, promises to pay someone else's debt, and sales of goods for $500 or more.

The name comes from an English statute of 1677, "An Act for Prevention of Frauds and Perjuries," which American states copied and adapted. (Parliament repealed most of it, including the one-year provision, in 1954.) Every state has its own version, so the details vary. The core categories are the same nearly everywhere, though a few states omit some (North Carolina and Pennsylvania have no one-year provision).

Which contracts must be in writing

Students remember the categories with the mnemonic MY LEGS:

Letter	Category	Example
M	Contracts in consideration of marriage	A promise to transfer property if someone marries (a prenuptial agreement)
Y	Contracts that cannot be performed within one year	A three-year fixed-term employment contract
L	Contracts for the sale of an interest in land	Selling a house, granting an easement, leases over one year in many states
E	Promises by an executor to pay the estate's debts personally	An executor promising to pay a creditor out of their own money
G	Sales of goods for $500 or more (UCC § 2-201)	Buying a used car for $3,000
S	Suretyship: promises to answer for another's debt	A parent promising a landlord to pay if their child does not

California's statute, Civil Code § 1624, shows how a state writes this. It says the listed contracts "are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged," and its list includes "an agreement that by its terms is not to be performed within a year," "a special promise to answer for the debt, default, or miscarriage of another," and agreements "for the leasing for a longer period than one year, or for the sale of real property." It also adds a category some other states have too: agreements employing a real estate agent or broker for a commission.

The one-year rule is narrower than it looks

The one-year category covers only contracts that cannot possibly be performed within a year by their terms. A contract that might take years, but could in theory be finished sooner, is outside it.

In C.R. Klewin, Inc. v. Flagship Properties, Inc. (Conn. 1991), a construction manager had an oral agreement for a large, multi-phase project expected to run for years. Answering questions certified by the federal Second Circuit, the Connecticut Supreme Court held that an oral contract like this one, which did not state its duration, was outside the one-year provision. A contract is within it only if "its terms are so drawn that it cannot by any possibility be performed fully within one year," and an oral contract that does not say "in express terms" that performance will last beyond one year is outside the statute. The court said most jurisdictions take a similar view, though some courts also count contracts whose performance, by its nature, cannot be finished within a year.

Examples: "I'll employ you for two years" is within the statute. "I'll employ you until the project is done" usually is not, even if the project takes five years. Under the majority rule, a lifetime contract is outside it too, because the person could die within a year. Some states, such as New York, require a writing for lifetime contracts by statute.

Sales of goods: UCC § 2-201

For goods, the Uniform Commercial Code sets the rule in § 2-201(1): a contract "for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker."

The writing can be brief. It need not contain every term; it must show a contract was made and, in practice, state the quantity, because the contract is not enforceable beyond the quantity shown. The UCC also has its own exceptions:

• Merchant's confirmation. Between merchants, a written confirmation that is sufficient against the sender, received within a reasonable time by a recipient who has reason to know its contents, satisfies the writing requirement against the recipient "unless written notice of objection to its contents is given within 10 days after it is received." The sender must still prove a contract was made.
• Specially manufactured goods that are "not suitable for sale to others in the ordinary course of the seller's business," once the seller, before notice of repudiation, has made "either a substantial beginning of their manufacture or commitments for their procurement."
• Admission in court that a contract was made, up to the quantity admitted.
• Performance: goods for which payment has been made and accepted, or which have been received and accepted.

What counts as a writing and a signature

• It need not be a formal contract. A letter, a memo, a receipt or several documents read together can satisfy the statute, if they show the essential terms and are signed by the party to be charged.
• Only one signature is needed: that of the person you are trying to hold to the contract.
• Electronic records count. Under the federal E-SIGN Act, a contract "may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation." This applies to transactions in or affecting interstate commerce, and most states have a similar rule under the Uniform Electronic Transactions Act. An email with a typed name can be enough, depending on the circumstances and state law.

Exceptions that can save an oral contract

• Part performance (land). Many states enforce an oral land contract where the buyer has taken possession and paid, or made improvements, in reliance on it.
• Full performance. Once one side has fully performed a contract that falls within the one-year provision, the statute does not prevent enforcing the other side's promises.
• Promissory estoppel. Many states allow a promise to be enforced despite the statute where the other party relied on it and injustice can be avoided only by enforcement. See our guide to promissory estoppel.
• The UCC exceptions above, for sales of goods.
• Main purpose rule (suretyship). A promise to pay another's debt that is made mainly for the promisor's own benefit may fall outside the statute.

Even where the statute bars enforcing the contract, a party who has performed may be able to recover the value of what they gave through restitution.

Worked examples

Example 1: the handshake house sale

Leo agrees by phone to sell his house to Anita for $400,000. Before anything is signed, he gets a better offer and backs out. Anita cannot enforce the deal: a land sale must be in writing. If Leo had sent an email saying "I agree to sell you 12 Elm Street for $400,000. Leo," that might be enough, because it is signed by him and states the essential terms.

Example 2: the two-year job

An employer orally hires Maya "for two years at $90,000 a year," then fires her after three months. Because the contract by its terms cannot be performed within a year, it falls within the statute and is unenforceable without a writing in most states. If the promise had been "as long as the store stays open," it would likely be outside the statute.

Example 3: the parent's promise

A landlord rents to a student after her father says, "If she doesn't pay, I will." That is a promise to answer for another's debt, so it must be in writing to be enforced against him. If instead the father had said, "Rent the apartment to her and send me the bill," he would be the primary debtor, not a surety, and the statute would not apply.

How it shows up on the exam

1. Is the contract within the statute? Run through MY LEGS. For the one-year rule, ask whether performance within a year is impossible by its terms.
2. Is there a sufficient writing? Essential terms, signed by the party to be charged. Several documents can be combined.
3. Does an exception apply? Part performance, full performance, promissory estoppel, UCC exceptions, main purpose rule.
4. If unenforceable, is there restitution?

Common traps: treating every long project as a one-year contract; forgetting that only the defendant's signature matters; and missing the merchant's confirmation rule in a sale between two businesses.

If this happened to you

• Get important deals in writing. Land, long-term commitments, guarantees of someone else's debt, and purchases of goods for $500 or more are the ones most likely to need it.
• Emails and texts can matter. A message signed or clearly sent by the other person that confirms the key terms may satisfy the statute, though some states, such as California, do not accept a text message alone for a real estate sale. Keep them.
• Doing what you promised can help. If you paid, moved in, delivered or relied heavily on an oral deal, an exception may apply, or you may recover what you gave. For land, payment alone is usually not enough.
• State law controls. Each state has its own list and exceptions, and real estate deals often have extra formalities.
• This is general information, not legal advice. A lawyer licensed in your state can tell you whether your agreement is enforceable. Your state or local bar association can usually refer you to one.

How India treats it

India has no general statute of frauds. Under section 10 of the Indian Contract Act, 1872, an agreement can be a contract without writing, but the section expressly preserves any law "by which any contract is required to be made in writing." Particular statutes impose that requirement: an agreement without consideration made out of natural love and affection, or a promise to pay a time-barred debt, must be in writing (Contract Act, s. 25), and an arbitration agreement must be in writing (Arbitration and Conciliation Act, 1996, s. 7). Land works differently from the US. An agreement to sell land can be oral (Alka Bose v. Parmatma Devi, 2009), but the sale itself of tangible immovable property worth one hundred rupees or more can be made only by a registered instrument (Transfer of Property Act, 1882, s. 54).

Related reading

• The parol evidence rule
• Promissory estoppel
• Meeting of the minds in contract law
• Adverse possession

Sources

• Uniform Commercial Code § 2-201 (Cornell LII)
• California Civil Code § 1624
• C.R. Klewin, Inc. v. Flagship Properties, Inc., 220 Conn. 569, 600 A.2d 772 (1991), which also traces the 1677 English statute
• Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001
• Cornell LII, Wex: statute of frauds
• Indian Contract Act, 1872, ss. 10 and 25; Transfer of Property Act, 1882, s. 54; Arbitration and Conciliation Act, 1996, s. 7
• Alka Bose v. Parmatma Devi, (2009) 2 SCC 582