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.
Contracts are part of our everyday personal and business lives. If you are a business owner or manager of a business, you deal with contracts when you transact business with contractors, vendors, landlords, banks, employees, and customers. In our personal lives, we deal with contracts when we buy a house, buy a vehicle, sign a lease, and sign up for social media accounts.
Contracts are promises that the law will enforce. A contract is a legally binding agreement between two (2) or more persons or legal entities (e.g. corporations or LLCs), where one party agrees to provide a good or service in exchange for money, services, or other goods.
Contracts are governed by state statutes, common law (judge-made), and private law. Private law consists of the agreed upon terms of the contract between the contracting parties.
It is beneficial to have a written agreement just in case disagreement arises between the parties. Merely reducing an agreement to writing does not automatically make the contract legally enforceable. Some agreements must be in writing and meet specific requirements. See our blog post on Florida’s Statute of Frauds and Elements of a Valid Contract. There are certain clauses that should be included in contracts to protect the parties in the event of a disagreement. For example, jurisdiction, venue, mediation, jury trial, arbitration, and payment of attorney’s fees and costs provisions. A Florida business attorney will help you determine what needs to be in the contract and will ensure that the contract complies with Florida law.
If you have any questions, feel free to contact Abigail D. Edelstein at (407) 862-9449 or make an appointment for a free thirty minute case assessment.
If you own a business, it is important to establish an agreement or contract with those you do business with. It will take a little more effort than a handshake and may cost for an attorney to draft or review the written contract. However, you will have the peace of mind knowing that should the worst happen your business will be protected.
An experienced business attorney will make sure the necessary clauses are included to protect your business. For example, a prevailing party clause explains what costs and fees the losing party is responsible to pay to the winning party. If you did not have a contract, and if there is no law giving you a right to collect fees and costs, then each party will have to bear their own expenses. Costs and fees include attorney’s fees which can add up quickly should the matter be filed in court. It is already bad that the deal fell through. It could be worse if you have to pay an attorney out of pocket with no possibility of recouping those costs.
Most business owners forgo seeking the help of an attorney to draft or review their contracts because they think it is too expensive. What they do not realize is that if the other party does not fulfill their obligations then they will probably have to hire an attorney anyway. Most business owners meet with me after the deal falls through. At this point, I am trying to figure out what the terms of the agreement were and how we can prove such agreement. There is no reason for it to get to this point.
I would advise having an attorney review or draft your contracts before you seal the deal. Paying an attorney to do this could save you a lot of time and money down the road. My firm offers flexible payment options to fit the needs of any business. You can hire us for a specific task or you can make us part of your team. We have monthly plans that include consults (in person or over the telephone), document review, and other services.
To discuss your business needs call (407) 862-9449.