Question

Subject: Business Ehics & Law

Why is it necessary for a contract which cannot be completed in one year to be in writing ?

Answer 1

Answer

Generally oral or written both agreements are enforceable but there is always an issue of existence with the oral agreements. In case of valuable or vulnerable agreements or contracts it is important to ensure their existence and thus it is safest to have such agreements in writing making them valid and enforceable.

To prevent fraud related to contracts there are some writing requirements made compulsory under statue of frauds as written agreements are contracts are much more reliable than oral.

If we talk about the 1 year rule, one year is just a time period limit to enforce the contract in writing under the statue of frauds. 1 year period does not mean that the contract must be completed within a year but it means that it can be completed within a year. If in any case it seems that the contract can be completed within a year then it is not necessary to have a contract in writing.

Based on that the statue of frauds have made some contracts compulsorily to be in writing otherwise they will be void or voidable such as:

• Sale or transfer of Land or property
• Marriage and other family contracts
• Surety contracts
• Contract that cannot be completed within a year
• Agreement of making a payment on the behalf of other
• Contract of sale for $500 or more.