Statute Of Frauds
The Statute of Frauds is a collective term describing the various statutory provisions which render unenforceable certain types of contracts unless they are evidenced by a writing. The Statute of Frauds does not mean that oral agreements within the scope of the Statute cannot be made and performed or that they are illegal. It merely means that enforcement may be unavailable if one of the parties refuses to fulfill their obligations.
California’s Statute of Frauds (Cal.Civ.Code §1624) states that certain contracts “are invalid, unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged.” Note that under this language the contract itself need not be in writing. There only needs be some written evidence of it which is signed by the party to be charged. I.e., the memorandum is not the contract, but merely evidence of its terms; the oral agreement is the contract.
“A contract is said to be ‘within the statute’ if its provisions are such that its operation and enforceability depend upon compliance with the requirements of the statute; it is said to be ‘not within the statute’ if its operation and enforceability do not depend on such compliance.
According to this usage, a contract may be ‘within the statute’ even though it is completely in writing and duly signed and delivered, so that the requirements of the statute are fully satisfied.” (Corbin on Contracts § 276)
The object of the Statute of Frauds is essentially to prevent perjured testimony in proof of purported contracts of important types.
Contracts Not To Be Performed Within One Year
An agreement that by its terms is not to be performed within a year from the making thereof comes within the statute. The important words are “by its terms”; i.e., only those contracts which expressly preclude performance within a year are unenforceable. If it is merely unlikely that it will be so performed, or the period of performance is indefinite, the statute does not apply. An oral agreement which, according to the intention of the parties, as shown by the terms of the contract, might be fully performed within a year from the time it was made, is not within the statute, although the time of its performance is uncertain, and might probably extend, and be expected by the parties to extend, and does in fact extend, beyond the year. “The question is not what that probable, or expected, or actual performance of the contract was, but whether the contract, according to the reasonable interpretation of its terms, required that it should not be performed within the year. ” (Warner v. Texas & Pacific R. Co., 164 U.S. 418, 17 S.Ct. 147, 41 L.Ed. 495 (1896)
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