Statute of Frauds California

What is the Best Definition for the Statute of Frauds?

The Statute of Frauds requires certain contracts to be documented in writing and signed by the contract’s parties. The Statute of Frauds aims to avert fraud and other injuries to the parties involved in the contract.

All states enforce the Statute of Frauds laws, but these laws differ from state to state.

For example, in California, all real estate or land-based transactions must be put in writing or utilize a deed or similar document. The contract can be void if the parties do not respect these terms.

Before making a formal verbal or written deal, all professionals must consider the Statute of Frauds in their states.

What is the Primary Purpose of the Statute of Fraud?

The Statute of Frauds’ primary purpose is to ensure that all parties to a contract comprehend the contract’s terms. The Statute of Frauds states that all contracts must be placed in writing to be enforceable.

California Civil Code section 1624 expresses the state’s Statute of Frauds, and states that in some cases, documented evidence of the terms of the agreement suffices.

The Statute of Frauds also means that some oral contracts may not prove enforceable in the state, depending on their contents and applications.

What Contracts Does the Statute of Frauds Apply to?

• Agreements that, according to the terms, cannot be fulfilled or carried out in one year
• Land leases that exceed one year
• Real estate agreements
• Agreements to buy or sell property
• Guarantees to pay off the debt of another party
• Real estate brokerage contracts
• Agreements to loan capital or extend credit in the amount of $100,000 or more
• A contract with terms that say it will not be performed or fulfilled during the lifetime of the guarantor
• A sale of goods over $500
• The sale of personal property for more than $5,000

Please note that the above list of contracts may not include all applicable situations, and additional contracts may also fall under the Statute of Frauds in California.

What Do Contracts Within the Statute of Frauds Contain?

The contracts covered within the Statute of Frauds typically contain a substantial amount of time, and the contract terms usually last longer than a year.

When contracts involve a noteworthy amount of time or, for example, rely on a debt to be paid or another action to be carried out over 2-3 years, they usually fall within the Statute of Fraud.

Therefore, the Statute of Frauds only covers long-term contracts since contracts involving periods over a year are usually substantial and important to everyone involved. They involve a sizeable risk for the individuals involved.

These serious contracts within the Statute of Frauds are enforceable in a California court of law.

For example, an individual enters into a contract to buy an apartment in San Diego for a specific price: $500,000.

In addition, the buyer agrees to pay the mortgage in monthly installments for two years. This contract involves a serious real estate deal lasting longer than a year, so it must be written in writing, according to state law.

The fact that the participants must commit the contract to writing prevents both parties from making a fraudulent claim.

For example, one party could dispute the price the individuals agreed upon or the length of the contract. The seller could claim that the price was $800,000, and there would be nothing to support the buyer’s honest claim regarding the agreed-upon selling price.

When the Statute of Fraud covers a contract longer than a year, the written contract is enforceable, and therefore, the Statute helps to prevent fraudulent or deceptive claims.

In preventing fraud and deception, the Statute also prevents disputes from occurring among the contract’s parties.

What is Required to Satisfy the Statute of Frauds?

Contracts covered by the Statute of Frauds in California must include the following:

• The identity of the parties involved in the contract
• The consideration involved in the contract
• The agreement’s main subject matter
• The agreement’s rules and procedures

Additionally, both parties must sign the contract for it to exist within the Statute of Frauds in California.

A Statute of Frauds contract does not need to consist of one single document. Instead, the contract can include several separate documents if they are related to the same transaction and signed by all involved parties.

While oral testimony is allowed, the involved parties must also put the contract in writing.

How Do Courts in California Interpret the Statute of Frauds?

California courts often use a broad interpretation to define a contract as covered under the Statute of Frauds. Specifically, the courts in California are known to enforce contracts that do not include all of the required conditions and information in their entirety.

For example, in the past, the court has accepted emails that include the terms of an otherwise oral agreement and found the email agreement enforceable. While email is not a traditional contract structure, the court supported it.

Even though the courts in California may appear flexible in some ways, parties should always put important contracts in writing. If a business or individual seeks to create an enforceable contract free of fraud or disagreements, they must back up their verbal deal with writing.

When parties intend to enter a serious contract regarding something of value to them, they should utilize California’s Statute of Frauds, which means abiding by the Statute’s rules.

On the other hand, many real estate brokers add disclaimers to casual messages such as emails or texts, stating that their messages do not constitute a valid contract. These disclaimers aim to prevent a casual email about the price of a house, for example, from turning into a valid contract that one party believes is binding.