‘Get it in Writing’: Avoiding the Pitfalls of the Statute of Frauds
Ben J. BilimekBen J. BilimekWhen considering whether to file a lawsuit for breach of contract, one of the first questions is whether there is an enforceable agreement.
Indiana law allows parties to create an enforceable contract exclusively through the exchange of words. Verbal contracts with clear terms and conditions can carry the same force and effect as written contracts, but there are significant exceptions to this general rule. Most notably, the Statute of Frauds.
The Statute of Frauds is found in the Indiana Code under I.C § 32-21-1. This statute provides six types of agreements that are only enforceable if they are in writing and signed by the party against whom the breach of contract action is brought against.
Among these six contracts required to be in writing are agreements for the sale of land. Land purchase contracts are the most common agreements carved out by the Statute of Frauds. The most familiar example is a real estate purchase agreement, but it also applies to the conveyance of any interest in real property, including mortgages, liens, land contracts, and other types of contracts that transfer interest in real property. Contracts that provide real estate interest as opposed to merely possession differ when it comes to the Statute of Frauds. Agreements that only provide possession of real estate rather than title or interest – such as leases – may be oral and still enforceable.
The Statute of Frauds may be circumvented if certain facts are shown, such as part performance. An example of part performance that Indiana courts have found is when the seller has already conveyed title to the buyer and the only term of the agreement left to be performed is the payment. However, Indiana courts have broad discretion when considering a decision to compel a breaching party to adhere to an oral contract for the sale of land and every case is different and fact specific.
Having a written contract in place is always best. If a situation arises where a party has breached a verbal agreement, the Statute of Frauds is the first place to look in order to determine the enforceability of the agreement. Seeking advice from an attorney to discuss the options available in these situations is always best.
