Running a business requires a lot of hard decision-making, no matter the size of the company. Crafting the terms of contracts can be one of the most headache-inducing aspects of any business. As such, from time to time you might rely on oral promises and agreements made over the phone with various suppliers or contractors, in order to save time and money. Before you do that, however, you should know how the statute of frauds applies to business contracts in Florida.
What is the statute of frauds?
Despite its name, the statute of frauds doesn’t refer to one particular statute. Rather, it’s the name of a legal principle enshrined in Florida’s laws – and other states’ laws – that governs the enforceability of contracts. In other words, it establishes the elements that certain types of contracts need to have in order for a court to be able to uphold and enforce them in case of a lawsuit.
The types of contracts that the statute of frauds applies to have to be in writing in order to be enforceable. The writing must contain all of the essential elements of the deal, and have the signature of at least the party that enforcement is sought against – preferably of both parties.
Types of contracts that the statute of frauds applies to
There are five types of contracts that must be in writing in order to be enforceable. Only some of them are important for business owners. The five types of contracts are:
- Suretyship – which is a contract to pay someone else’s debt
- The sale of land
- The sale of goods valued at $500 or more
- A contract that cannot be performed within one year
When time is short and the pressure is on, you may feel the temptation to make an oral agreement. If the contract falls into one of the above categories, however, it’s worth the time and effort to put the agreement in writing and ensure that it contains all the essential terms, in case you find yourself in a lawsuit down the road.