What is the Statute of Frauds in California?

Business and corporate litigation attorney Gregory G. Brown talks about the Statute of Frauds in California. Click here to watch the video

The Statute of Frauds, which is set forth in California Civil Code Section 1624, requires certain contracts to be in writing, or that there be written evidence of the contract terms. An oral contract, one that’s not in writing, may not be enforceable. Contracts that must be in writing will include, but aren’t necessarily limited to, the following: an agreement that by its terms cannot be performed within one year, a promise to pay the debt of another person, leases of real property for terms greater than one year, a contract for a real estate agent and/or brokerage agreement, a contract for the purchase of real property, and a contract to loan money or extend credit over $100,000.

Generally, the types of contracts previously listed, are ones that involve significant value, or will take a period of time for the contract to be performed. These contracts are significant, and therefore, the law requires them to be in writing. Without this requirement, it would be easy for a party to fraudulently claim, for example, that you agreed to sell your house for $200,000. It would be unfair to require you to sell, or the seller to sell, unless specified in a written agreement signed by both parties.

The statute does not require only one writing. It can be done over a number of writings, not just a single document. The writing can be demonstrated by several written agreements or writings that have some relation to one another. For example, a signed and then unsigned writing (two separate writings) may be read together, provided that they clearly refer to the same subject matter or transaction. At a minimum, the writing must state with reasonable certainty  the identity of both contracting parties, the subject matter of the contract so it can be identified from either the writing or by the aide of extrinsic evidence, and the essential terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made.

Over the years through court opinions and court rulings the scope of what constitutes a writing that satisfies the Statute of Frauds has become quite broad. For example, an email that recited all of the terms of an agreement reached orally between two parties when they were face to face meeting, in one instance, was found to satisfy the California Statute of Frauds. Practically speaking, and even assuming that an agreement is not required to be in writing to be enforceable under the Statute of Frauds, a good rule of thumb is that every contract should be reduced to some form of writing and signed by the parties to the agreement.

For more information on this topic, or if you have other contract related issues, call us today at 714.505.3000 or email us at inquiries@bc-llp.com.

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