The Statute of Fraud - Essay Example

 The Statute of Fraud Abstract This document outlines what the Statute of Fraud is, how violations or breaches could occur and the judicial remedy in instances where the breaches or violations have occurred with regards to this statute. Where possible, references have also been made to cases to elaborate further on the topic and to provide examples. There are many definitions for the Statue of Fraud. By and large all these definitions carries the same meaning and the change is only in the way that it is expressed. The renowned online Encyclopedia Wikipedia has defined the Statue of Fraud as a requirement that certain kinds of contracts be made in writing and signed. The Wikipaedia definition further explains that traditionally a Statue of Fraud has been required in circumstances where the contract relates to Marriage, or cannot be performed within one year, or where it concerns transfer of interests in land, or where it relates to a contract by the executor of a will to pay a debt of an estate with their own money, contracts for the sale of goods above a certain value and finally in contracts where one party becomes a surety or acts as a guarantor. In the Free Dictionary by Farlex the Statue of Fraud is described as a type of state law that was modelled after an old English Law. This further goes on to add the Statue of Fraud has been adopted by the U S from English Law dating back to the year 1677. This US Law acts as a defence in a breach of contract lawsuit. “This has been designed to prevent the possibility of a nonexistent agreement between two parties being proved by perjury or fraud”. Therefore, under this law it is necessary that a written note or memorandum of agreement be drawn up if a particular contract is to be enforced. Simply said, that Statue of Fraud ensures that a written agreement exists between two parties in certain types of contracts described previously in this paragraph. Larson (2003) has described that the Statue of Fraud requires that certain contracts be in writing and that they are to be signed by all parties to be bound by the contract. Contracts involving the sale or transfer of land, contract to answer for the debt or duty of another and contract by its term which cannot be completed within a year and the contract for the sale of goods under the uniform commercial code fall under the category of the Statue of Fraud. The origins of the Statue of Fraud can be traced back to 1677 and to the English Statutory law passed during the said period. The Statue of Fraud was established with intentions to prevent injury from fraudulent conduct. Stuckey (2003) has related the statute of fraud to the present era of the information age and said “It is important to note at the outset that the Statute of Frauds is one of the most important legal issues for electronic contracting. The Statute of Frauds designates which types of contracts are not enforceable unless memorialized in a signed writing. Most states have enacted some version of the Statute of Frauds, either in its common law or Uniform Commercial Code (UCC) forms”. This highlights the importance of the Statute of Frauds and its relevance to the modern day where a bulk of the contracting may be done using the electronic media. According to Raysman, Pisacreta, Adler and Seth (1999), “Both the UCC and UCITA require a signed writing or in UCITA’s terms, an authenticated, record in connection with agreements beyond those specified by the common law. For instance the UCC imposes the requirement on contracts for sale of goods of a price of $500 or more of for lease contracts whose total payments are $1,000 or more while UCITA requires an authenticated record of contracts requiring payment of a contract fee of $5,000 or more”. This could be taken as a basic guideline where contracts need to be drafted if these agreements are to fall under the scope of the Statute of Frauds. Breach related to the Statue of Fraud is segregated into four main categories. These four categories are minor breaches, material breaches, fundamental breaches and anticipatory breaches. Wikipedia defines a minor breach as follows “a minor, partial or immaterial breach occurs when the non-breaching party is unentitled to an order for performance of its obligations, but only to collect the actual amount of their damages”. Reference can be made to Jacob and Young v. Kent (230 N.Y.239-1921) where the defendant found out that some pipe used in building was Cohoes piping instead of being made in Reading. The Defendant through the architect requested the plaintiff to do the work all over again according to the perfect tender rule. Since this would have required a great extent of the work done to be demolished and reworked the plaintiff left the work untouched and asked for a certificate that the final payment was due on the grounds of substantial performance. It was held that the plaintiff builder is entitled for his money and that he does not have to replace the Cohoes pipe already laid with Reading. Where the defect is insignificant, the court will find that there has been substantial performance and excuses a breach. A material breach is defined in Wikipedia as “any failure to perform that permits the other party to the contract to either compel performance or collect damages because of the breach”. In order to determine if the failure to perform falls under material breach the following needs to be taken into consideration; the extent to which the injured party is deprived of the benefits expected, the extent to which the injured party can be adequately compensated for the injured party is deprived of, the extent to which the party failing to perform will suffer and finally the likelihood of the party failing perform curing the failure to perform. American Law Institute, Restatement (Second) of Contracts 241 (1981). “A fundamental breach of a contract, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages” is the definition found is Wikipedia for fundamental breach under the Statue of Fraud. The law of fundamental breach was apparently considered as an extension of the doctrine of deviation during the earlier half of the 19th Century. In Davis v. Garrett it was held that deviation made by a carrier from its agreed voyage route brought Garrett to deviate from the scope of the contract which was agreed upon. The reason for such harsh judgements during this period was because of marine insurance practice where cargo insurance policies were made null and void as a result of ocean liners changing the voyage route. More recently in Photo Productions Ltd v. Securicor Transport Ltd in 1978 where a strict Rule of Construction was maintained and a fundamental breach will only be ruled after examining reasonable intentions of the parties at the time of the contract. “An anticipatory breach is an unequivocal indication that the party will not perform when performance is due or a situation in which future non performance is deemed as inevitable” is the definition that is found for anticipatory breach in Wikipedia. An anticipatory breach gives the non breaching party the choice of treating this as an immediate breach. If treated as an immediate breach, the non breaching party can terminate the contract and also sue for any damages due to non performance. The key characteristic of this is that the non breaching party could actually proceed with taking action without having to wait until non performance occurs. According to the law of anticipatory repudiation the performing party to the contract is excused from having to perform to their obligations as part of the contract. The judicial remedy in instances where a minor breach, a material breach, a fundamental breach or an anticipatory breach occurs is monetary damages. In an event where failure to perform cannot be sufficiently redressed by monetary damages the court may enter into an equity decree and thereby award an injunction. An injunction is defined as an equitable remedy which requires a party to do certain acts or refrain from doing certain acts. In the event a party fails to comply with an injunction this party could either face civil or criminal penalties. Furthermore, the aggrieved party too has an obligation to mitigate the damages reasonably. In general in the United States punitive damages are not awarded for a breach of contract. The above is a brief outline of the Statute of Frauds and key features attached to it. References 1. American Law Institute, Restatement (Second) of Contracts 241 (1981). 2. Free Dictionary by Fared, (www.thefreedictionary.com). 3. “Larson Aaron”, Law Offices of Aaron Larson, published in October, 2003. 4. “Raysman Richard, Piscareta Edward A, Adler Kenneth A & H Seth”, Intellectual Property Licensing – Forms and Analysis, published in 1999. 5. “Stuckey Kent D”, Internet and Online Law, published in 2003. 6. Wikipedia free Encyclopedia, (www.wikipedia.org). Read More