VirtuaClass

Often people believe that a contract must be in writing in order for it to exist or for it to be enforceable. Although, it is probably best practice to reduce your contractual agreement to a writing, this is not required in most instances. However, under the Statute of Frauds, six types of contracts must be written and signed. These contracts include:

1. Contracts in consideration or marriage
   1. This applies to your typical premarital contract
2. Contracts which cannot be performed within 1 year
   1. For example, some large construction projects can take up to 5 or 10 years in order for the structure to be complete and the contract to be fully performed.
3. Contracts for the transfer of an interest in land
   1. Real Estate contracts, purchase agreements, etc.
4. Contracts by the executor of a will to pay a debt of the estate with their own money.
5. Contracts for the sale of goods over $5,000.
   1. This applies to the entire contract. For example, if you are selling skateboards at $100 dollars each, then most of the time you won’t need a written contract for it to be enforceable. However, if a certain buyer wants to buy 51 skateboards (making the total purchase price $5,100), then the contract must be in writing for it to be enforceable.
6. Contracts in which one party becomes a surety (acts as guarantor) for another party’s debt or other obligation
   1. Co-signing on a car, loan, home, etc.

Although, by law these six contracts must be in writing to be enforceable, there are other good reasons to put your contract in writing. For example, if the contractual agreement is complex and detailed, then a writing will probably be more reliable than your memory. In addition, verbal communication can sometimes be misleading and difficult. Two parties could leave a contract negotiation with different perceptions about what was decided or have some confusion about minor details. However, with a well-written contract, it is difficult for the other party to claim that they had a different understanding or expectation.

This entry was posted on Friday, July 18th, 2008 at 8:10 am and is filed under Legal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.