In general, contracts can be created by either an oral agreement or in a written format. There are certain types of contracts, however, that the law will not recognize unless they are in writing. This means that contracts falling under the writing requirement cannot be made via an oral agreement.
Many of the guidelines for the writing requirement in contracts law are set out in a legal concept known as the “statute of frauds.” The purpose of the rules under the statute of frauds is to help prevent the formation of fraudulent contracts through its writing requirement.
The rationale behind this concept is that written contracts tend to be more reliable than oral agreements. For example, in the event of a contract dispute, the parties will be able to refer back to the written document for proof. The same cannot be said when an oral contract is involved.
What Types of Contracts Must be in Writing?
According to the statute of frauds laws for most states, the following types of contracts must be in writing and signed before it can be considered a valid contract under the law:
- Contracts for the transfer or sale of land;
- Contracts related to marriage;
- Contracts for the sale of goods worth $500 or more;
- Contracts that cannot be fully performed within one year of signing (in accordance with the terms of the contract);
- Contracts that involve a promise to pay another individual’s debt (i.e., “surety contracts”); and
- Contracts for when an estate executor agrees to pay off debts from their personal funds.
Contracts that are subject to the writing requirement should also provide the basic terms and conditions of the parties’ agreement; clearly identify the parties to the contract; and list the subject matter of the agreement (e.g., the type of goods or services involved).
Who Can Write a Contract?
Generally speaking, only those persons who are of legal age (usually 18 years old) and have been deemed to be mentally competent are permitted to form a contract.
On the other hand, the average person is not normally familiar with contract law or the writing requirements for contracts. Even simple arrangements might require a rather complex written contract.
Thus, despite the legal requirements for who can write a contract, actually drafting a contract takes a great deal of planning and usually involves having basic knowledge of contract laws as well.
For this reason, it is in a person’s best interest to have an attorney draft and review a contract before signing it.
It is also a good idea to have the contract reduced to writing, even when it is not required by the statute of frauds. This way, as discussed above, there will be a record of the agreement for reference in case a dispute arises in the future over it.
What Happens If the Parties Do Not Follow the Contract Writing Requirements?
If the contract is subject to the statute of frauds, the parties must create a written contract document. If the parties do not follow the writing requirements for contracts, it could result in very negative consequences for both parties.
For instance, if there is a conflict concerning the parties’ agreement and that agreement does not comport with the contract writing requirements, then it may not be enforceable in court or have the ability to get resolved through legal action.
In some jurisdictions, it may still be possible to enforce an oral contract that has not been written down and is also not in compliance with the rules of the statute of frauds.
For example, if one party has already started to perform their part of the contract, then they may be able to have the contract enforced. Another example of when a contract may be taken out of the statute of frauds is if one of the parties relied on the promise to their detriment.
One final example for when a contract may be enforceable without a writing is when it is for specially manufactured products (for $500 or more) that were made custom for a particular buyer and most likely cannot be sold to another purchaser (e.g., a piece of jewelry engraved with the buyer’s full name on it).
Do I Need to Hire a Lawyer for Help with Contract Writing?
An experienced contract lawyer can be of great assistance when it comes to the writing requirements in contract law.
A local contract lawyer will be able to advise you about the contracts laws that apply in your particular area and to your specific matter. They can also help to clarify what else is required for you to be in compliance with the statute of frauds.
Additionally, a lawyer can assist with drafting your contract, reviewing it, and ensuring that it fulfills all of the other necessary legal requirements.