Most contracts do not need to be in writing in order to be binding. It is, however, often desirable that an agreement is set out in writing to avoid doubts and disputes. The expression that a verbal contract “is not worth the paper it is written” embodies the practical difficulties that may arise in some cases in proving the fact and terms of a verbal contract. This is a greater risk where there has been an exchange of promises only and performance has not yet commenced.
There are certain categories of contract which must be in writing. In most cases, the requirement is not that the contract, needs to be in writing, but that it is only enforceable if it can be proved by writing signed for or on behalf of the person being sued. Many of these requirements arise from very old laws designed to prevent fraud by way of false assertions of verbal contracts, which might be difficult to disprove.
The following examples are the principal forms of contract that must usually be proved by a note in writing signed by the person against whom it is to be enforced. The agreement itself may be verbal and may validly exist. However, it will not be enforced by the court unless there is a written and signed note or unless certain other circumstances apply so that it would be inequitable not to enforce it.
Performance Outside One year I
A contract, which is not to be performed within one year, can be enforced only against a party who has signed a note in writing of its terms. If the parties intended to perform within in one year, the requirement does not apply.
The Statute provides that a contract which is not to be performed within a year are not enforceable unless it is evidenced by a memorandum in writing signed by the person to be so charged.
The key determinant of whether the contract is subject to the Statute is whether, at the time that the contract was made, the parties intended that it would take a year or more to perform. The matter turns on the intentions of the parties at that time. The actual events that later occur are immaterial.
The provision applies to any type of contract, including agreements for leases and employment contracts. In Ireland, an agreement for lease has much the same effect as a lease. A lease for a term of more than one year must be in writing (rather than simply evidenced in writing). See generally the sections on landlord and tenant law.
Performance Outside One year II
The courts look at what it is be done over the course of the contract. If performance is contemplated over a period of more than a year, the statute applies. If may be that the contract can be severed into a number of distinct contracts, in which case the statute may not apply to some one or more of them,
There must be more than the possibility that the contract may be performed within a year. The Statute applies if the contract contemplates performance beyond a year.
If the parties intend that the contract be performed within a year, it is not subject to the statute. The fact that the agreement takes longer to complete and perform than contemplated, does not bring it within the statute.
There is support for the proposition that an agreement may be enforceable against the party whose performance does not require more than a year, without a memorandum signed by him.
It appears that an agreement which may be terminated at any point in time is not subject to the Statute. Accordingly, ongoing supply contracts, of indefinite duration are not subject to the Statute, if they are revocable at any time.
A contract may be severed so as to avoid the Statute at least as to part. If they are genuinely capable of severance into one or more obligations, some of which fall to be performed within a year and some beyond a year, the former may be saved in the absence of a memorandum. This will not be commonly possible.
The Statute of Frauds provides that no action shall be brought to charge any person upon any agreement made in consideration of marriage unless there is a memorandum in writing signed by the person to be so charged.
The statute is aimed at agreements to transfer monies, property or other assets typically to the intended parties to a marriage, in consideration of the marriage.
Agreements to marry in themselves, are no longer enforceable under family law legislation.
Goods > €12.70
A contract for the sale of goods in excess of €12 70 (£10) is not enforceable by action unless
- the buyer shall accept part of the goods so sold, and actually receive the same,
- give something in earnest to bind the contract,
- there is payment or part payment, or
- unless some note or memorandum in writing of the contract be made and signed by the party to be charged or his agent in that behalf.
This provision applies to every such contract, notwithstanding that the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured, provided, fit or ready for delivery, or that some act may be requisite for the making or completing thereof, or rendering the same fit for delivery.
The final alternative is that there is some note or memorandum in writing of the contract made and signed by the party to be charged or his agent in that behalf. The principles applicable generally to the signing of a memorandum apply.
Goods; Receipt and Acceptance
The first alternative requires both the receipt and acceptance of the goods by the buyer. There is an acceptance of goods when the buyer does any act in relation to the goods which recognises a pre-existing contract for the sale, whether there is an acceptance in the performance of the contract or not.
Both the acceptance and receipt of the goods is required. There is acceptance when the buyer does any act in relation to the goods, which recognises a pre-existing contract of sale, whether there is an acceptance and performance of the contract or not. The goods must be both received and accepted. It is sufficient that a substantial part of the goods has been accepted.
Acceptance and receipt by an agent may suffice provided that the agent has authority to do so. Mere acceptance by a third-party carrier who does not have authority to both accept (approve) and receive the goods on behalf of the buyer is insufficient. Acceptance of a part of the goods is sufficient unless the contracts are separate, in which event separate compliance for each is required.
The principles applicable to a payment of part payment are similar and apply from the perspective of the buyer. The payment must be made and accepted.
Goods; Something in Earnest
The Sale of Goods Act provides a contract of the sale of goods more than £10 shall not be enforceable, unless
- the buyer shall accept part of the goods sold (actually receive the same)
- gives something in earnest to bind the contract,
- there is a part payment, or
- there is a note or memorandum of the contract, signed by the party to be charged
The second alternative is that something is given in earnest by the buyer. This requires that something in the nature of a gesture given in good faith. It must be such as to affirm the contract as a token of good faith, or assurance that the person who gives will perform the contract.
The thing given in earnest must be something tangible. It may be a deposit of monies or another thing. The thing must be given at the time when the contract is entered. It must be offered and accepted. Giving by itself is not enough.
A contract to guarantee the obligation of another must be evidenced by a note in writing, signed by the guarantor. The requirement applies only to a guarantee in the strict sense. This is a secondary obligation, to meet a person’s obligation if that person defaults. A primary obligation such as an indemnity is not a guarantee and does not require to be in writing.
The Statute of Frauds provides that no action shall be brought “to charge a defendant upon any special promise to answer for the debt, default or miscarriage of another person unless there is a memorandum in writing signed by the person to be so charged”. In this context, “charged” refers to the person concerned being held legally liable in respect of the obligation.
An agreement to meet another’s debt or obligation, if that other defaults on it, is a guarantee. In contrast, an indemnity is an undertaking to perform another’s obligation, irrespective of that other’s default.
The Statute of Frauds covers only a guarantee and not an indemnity. It does not apply to joint liability. Liability as principal obligor or debtor is not within the scope of the Statute. Accordingly, it does not require to be evidenced in writing
The requirement extends to debts and other obligations. By its terms, it applies to the “miscarriage” of another, so that a promise to be responsible for another’s tort / civil wrong is also within the Statute.
As is the case generally, whether or not an agreement, whether verbal or in writing, is within the Statute may be a matter of interpretation. The description of the subject matter is not conclusive. The matter turns on the substance of the obligations.
Statute of Frauds 1828 provides that no action shall be taken to charge any person by reason of any representation in relation to the character, conduct, credit, ability, trading or dealings of any other person, to the intent or purpose that such person may obtain credit, money or goods, unless the representation is made in writing signed by the party to be charged. This a separate to the provision in the Statute of Frauds applicable to guarantees.
Land / Real Property
The Statute of Frauds, covered a contract for the sale of land or an interest in land or real property. The provision is restated in revised, but similar modern terms in the Land and Conveyancing Law Reform Act 2009.
A contract for the sale of land or any interest in land must be evidenced in writing. This includes a contract for the grant or transfer of any easement rights leases or contracts relating to land. A lease for a period of more than a year must be in writing.
There is extensive case law on the requirements for a memorandum in the context of contracts for the sale or transfer of land or an interest in land. It need not contain the entire agreement.
The contract need not be in writing. All that is required, is that the key terms are in a written document, signed for or on behalf of the party, against whom the contract is enforced.
Requirements of Memorandum
The requirement for a note or memorandum can be satisfied without a formal agreement, deliberately drafted as a contract. Any writing which mentions the key terms may be sufficient. It may come into existence before or after the contract is made. It does not matter that the document concerned was never intended to have legal effect.
The key terms of the contract must be set out in the written note or memorandum. The parties should be mentioned by name or implication. The thing concerned must be identified, as should the price. It is not necessary that all terms are recorded. The essential terms are required.
The note (anything written) must be signed by the person against whom the contract is to be enforced. A “signature” can be a printed signature. It could be a signature given by a representative such as an agent. The note need not be a single document. It is possible for the signed note to “incorporate” other documents to which it refers.
Requirement for Property Contract Memorandum
Contracts for the sale or grant of an interest in land can only be enforced against a person who has signed a note setting out certain key terms including the property, price, parties and the other principal terms. An interest in land includes the sale of land or of any lesser interest in land, such as an easement or the grant of a lease. Leases for a term of more than one year must be in writing.
In the case of a contract for the sale of an interest in land, the memorandum must contain at least the following key terms,
- the parties
- the property
- the price
- other terms which the parties considered essential
There are a number of exceptions to the requirements of the Statute which were developed by the courts of equity, in particular in the context of real property. A person may not use the Statute of Frauds as an “engine of fraud” in itself.
Part Performance I
The requirement for signed note/evidence in writing may sometimes cause injustice. The principle of part performance provides a mitigation of the requirement for writing. The principle provides that the absence of a note in writing, may not be fatal to the enforcement of an agreement if it would be unjust.
The parties must have partly performed the contract so that it would be unjust to rely on the requirement for writing. The courts will not allow the requirement for writing to lead to a fraud or grossly inequitable result. The parties must have taken substantial steps on foot of the existence of the contract. In this case, the contract may be enforced notwithstanding the absence of writing.
Part performance requires a concluded verbal contract. The parties must have acted in a way which shows an intention to perform the contract. It must be unconscionable and a breach of good faith to allow the defendant to rely on the requirement for writing. The acts of the claimant are relied on in a part performance case.
The defendant must be shown to have been aware of what the claimant did and stood by without doing anything. Preparatory acts may not be enough. There must be some substantial partial performance of the contract obligations. Traditionally, the payment of money by itself was not sufficient part performance. However, exceptionally, payment of money is now potentially sufficient to constitute part performance.
Part Performance II
Part performance is said to establish an equity in favour of one party. The question in each case is whether the claimant has an equity arising from part performance, which is so affixed upon the conscience of the defendant, that it would amount to fraud on his part to take advantage of the fact that the contract is not recorded in writing. The right to relief rests not so much on the contract, as on what was done in pursuance or in the execution of it.
Part performance requires that the acts in question must be referable to the contract. They must be consistent with the contract as alleged. There must be a concluded verbal contract. The parties must show an intention to perform that contract. The defendant must have induced the claimant to act or to have stood by, while the defendant acted. It must be unconscionable and a breach of good faith to allow the defendant to rely on the Statute of Frauds.
he payment must be consistent only with the transaction as alleged. Where part payment is sufficient, the payment must be accepted.
Part Payment III
Traditionally, the payment of money was never sufficient to be part performance. However, the House of Lords in the late 1970s later followed in Ireland, held that in an appropriate case, the payment of money was capable of constituting a sufficient act of part performance.
Mere part performance is not enough. It must be unconscionable to allow the defendant to plead the statute as a defence. Each case of alleged part performance must be looked at in its individual circumstances.
In the context of the sale of land, part performance usually involves an element of execution such as payment of the purchase money and the assumption of possession by the buyer.
Even if the statute is not complied with, or if an equity is not available by way of part performance, restitution may be available by way of quantum meruit or quantum valebat, although the effect is to circumvent the statute.
Refusal of Relief I
Non-compliance with the Statute is not a matter circumventing legality and public policy. Restitution undoes unjust enrichment. It may in effect circumvent the Statute, even in cases which fall outside actual principles of part performance
The statute is not available as an engine of equitable “fraud”. Where one party has been guilty of sharp practice or misled another, the statute cannot be pleaded as a defence by the wrongdoer.
Where are contractual term is for the benefit of one party only, but is not recorded in writing, it may be waived. It must be exclusively for the benefit of that party. If there is any element of benefit for the other party, it may not be waived unilaterally.
Refusal of Relief II
A party may be estopped from relying on the Statute of Frauds. The general principles of estoppel apply. The equitable considerations applicable to part performance are broadly similar. Estoppel and part performance may overlap in some cases. A party may be estopped from pleading the statute or denying the adequacy of compliance with it.
The claimant may be equally being denied reliance on a memorandum, for example in cases where he has earlier denied its existence and the other party had acted in reliance on this position
Rectification may effectively circumvent the Statute. Where there is a concluded agreement which is not recorded in writing or is imperfectly recorded, rectification may be granted to implement it in its correct terms
References and Sources
Irish Textbooks and Casebooks
Clark, R. Contract Law in Ireland 8th Ed. (2016) Ch. 4
Friel, R. The Law of Contract 2nd Ed, (2000)
McDermott, P. Contract Law (2001) 2nd Ed (2017) Ch. 4
Enright, M. Principles of Irish Contract Law (2007)
Clark and Clarke Contract Cases and Materials 4th Ed (2008)
English Textbooks and Casebooks
Poole, J. Casebook on contract law. (2014) 12th edition
Stone and Devenney, The Modern Law of Contract 10th Ed (2015)
McKendrick, Contract Law 10th Ed (2013)
Chen-Wishart, Contract Law 5th Ed (2015)
Anson, Reynell, Beatson, J., Burrows, Cartwright, Anson’s law of contract. 29th Ed (2010)
Atiyah and Smith, Atiyah’s introduction to the law of contract. 6th Ed.
Chen-Wishart, M. (2015) Contract law. 5th Ed.
Cheshire, Fifoot and Furmstons, Furmstons and Fifoot Cheshire, Fifoot and Furmston’s law of contract. OUP.
Duxbury, Robert (2011) Contract law. 2nd Ed.
Halson, Roger (2012) Contract law. 2nd Ed.
Koffman & Macdonald’s Law of Contract. 8th Ed. (2014)
O’Sullivan, Hilliard, The law of contract. 6th Ed. (2014)
Peel, and Treitel, The law of contract. 13th Ed. (2011).
Poole, J.Casebook on contract law. 12th Ed. (2014).
Poole, J. Textbook on contract law. 12th Ed. (2014)
Richards, P Law of contract. 10th Ed. (2011)
Stone, R. The Modern law of Contract. 10th Ed. (2013)
Treitel, G. H. An outline of the law of contract. 6th Ed (2014).
Turner, C Unlocking contract law. 4th Ed. (2014).
Upex, R. V., Bennett, G Chuah, J, Davies, F. R. Davies on contract. 10th Ed. (2008).
Stone,Devenney, Text, Cases and Materials on Contract Law 3rd Ed (2014)
McKendrick, Contract Law Text, Cases and Materials 6th Ed (2014)
Stone, R, Devenney, J Cunnington, R Text, cases and materials on contract law. 3rd Ed (2014)
Burrows, A. S. A Casebook on Contract. 4th Ed.
Beale, H. G., Bishop, W. D. and Furmston, M. P. Contract: cases and materials. 5th ed. (2008)
Blackstone’s Statutes on Contract, Tort & Restitution 2017 (Blackstone’s Statute Series)
UK Practitioners Texts
Chitty on Contracts 32nd Edition, 2 Volumes & Supplement (2016)
The above are not necessarily the latest edition.