The statute of frauds is the general name for each state’s statute (law) that requires certain contracts to be in writing—or to have a written memorandum that records the essential elements of the agreement—in order to be enforceable. Statutes of fraud are an exception to the general rule that verbal or oral contracts are just as enforceable as written contracts. Statutes of fraud are designed to prevent fraud and perjury (lying under oath) in transactions that are especially susceptible to fraud.
Statutes of fraud vary from state to state, but generally include (1) contracts for the sale or lease of real estate (land); (2) contracts that cannot be performed within one year from the date of the contract’s formation—such as a two-year employment contract; (3) loan agreements in excess of a certain amount; (4) contracts involving engagement promises (return of engagement rings), marriage (prenuptial agreements), or cohabitation (support, responsibilities) and post-cohabitation support (palimony); (5) contracts for the sale of goods above a certain amount (often $500); (6) promises to pay an estate’s debt from the personal funds of the executor; and (7) contracts in which one person agrees to pay the debt of another person.
In Texas, the statute of frauds is codified primarily in Chapter 26 of the Texas Business & Commerce Code. This statute requires certain types of contracts to be in writing to be enforceable. These include contracts for the sale or lease of real estate, contracts that cannot be completed within one year, loan agreements for amounts not specified in the statute but typically significant, and contracts in connection with marriage, such as prenuptial agreements. Additionally, Texas law requires written contracts for the sale of goods priced at $500 or more, in line with the Uniform Commercial Code. Promises to pay the debt of another, including that of an estate, must also be in writing. These requirements are designed to prevent fraudulent claims and misunderstandings about significant agreements, ensuring that there is clear and tangible evidence of the terms and parties' intentions.
