Contracts are part of our everyday personal and business lives. Most daily business transactions take place without a formal written contract. For example, a clothing store does not require each customer to sign a written contract each time they purchase something. They usually give customers a receipt or ask them to sign a credit card receipt.
The statute of frauds bars the enforcement of certain types of contracts unless they are in writing and signed by the party (or legally authorized representative of party) against whom enforcement is sought. § 725.01, Fla. Stat. (2014).
The purpose of the statute of frauds is to prevent harm that results from fraudulent conduct. Since oral promises are difficult to prove, requiring a signed writing is a way to reduce fraud and litigation. The requirement that important transactions, such as the sale of real estate or agreements with longer time periods, be in writing has been an effective tool against fraud. By requiring parties to put certain agreements in writing makes the parties review the agreement’s terms and conditions before finalizing the transaction.
Under Florida Law, some common contracts where the statute of frauds applies are as follows:
- Contracts involving real estate transactions. 725.01, Fla. Stat. (2014).
- This includes the sale of land, easements, and mortgages.
- Contracts that cannot be performed within a one (1) year time period. 725.01, Fla. Stat. (2014).
- The one (1) year time period refers to the time required for performance of the contract. This does not apply to contracts with an infinite duration.
- Contracts to pay the debts of another. 725.01, Fla. Stat. (2014).
- Leases with a time period greater than one (1) year. 725.01, Fla. Stat. (2014).
- Guarantees by health care providers for any guarantee, warranty, or assurance as to the results of certain medical procedures. 725.01, Fla. Stat. (2014).
- Contracts for the sale of goods valued at $500.00 or more. 672.201, Fla. Stat. (2014).
The lesson from this blog post is that some commonplace transactions, such as leases for a period more than one (1) year or contracts involving real estate, are subject to the statute of frauds and all terms must be in writing. This rule applies to the original agreement and any subsequent amendments or modifications. In order to avoid a statute of frauds issue, you should always work with an experienced Florida business attorney to ensure all agreements comply with the Statute of Frauds and all other requirements of state law. Even if the statute of frauds does not apply to a transaction, it is better to have a written contract just in case any disagreement arises in the future. If you have any questions, feel free to contact Abigail D. Edelstein at (407) 862-9449.