In many instances, oral contracts between two parties to perform certain obligations are valid.  From a practical perspective, such contracts may be difficult to enforce due to the lack of tangible evidence regarding the details of the agreement and may not be in the best interests of the parties.

Certain real estate agreements are specifically required by law to be in writing under the California Civil Code.  These include leases of real property that exceed one year, agreements to pay commissions between principals and licensees, contracts for the sale of real estate and agreements with a mortgage provider to pay a debt secured by the mortgage.  Oral agreements in the preceding transactions will not be enforced by courts in accordance with the Statute of Frauds enacted in each state, including California.

The purpose of the Statute of Frauds is to prevent or substantially limit the enforcement of fraudulent or baseless claims with respect to transactions that are most susceptible to fraud.  In California, in addition to the real estate related transactions specified above, the Statute of Frauds applies to promises to pay the debt of another, agreements that require more than one year to complete, agreements not to be performed during the lifetime of the promisor and agreements to loan money in excess of $100,000.

Agreements under the Statute of Frauds require a written document and the signatures of both parties evidencing the terms of the agreement.  The contract itself need not be in writing, but there must be some note or memorandum signed by the parties to fulfill the writing requirement. While specified contracts must be in writing to comply with the Statute of Frauds, failure to do so may cause the contract to be unenforceable but does not render the contract invalid.

Contact Shane Coons at 949-333-0900 or visit www.ShaneCoonsLaw.com to learn more about his practice and services.