When Must a Contract Be in Writing to Be Valid?
In business, there’s much that gets done verbally, either on the phone or in meetings. Can you enforce a contract that has never been put in writing? What are the circumstances, if any, where an agreement can be disregarded if it hasn’t been committed to a written document?
The Statute of Frauds
As a general rule, most oral agreements are every bit as enforceable as written contracts, provided all the elements required of a contract can be shown—offer, acceptance and the exchange of something of value (known as “consideration”). A party seeking to enforce an oral contract must also show that the other party voluntarily entered into the agreement, that the object of the contract was legal, and that the other party was of necessary age and mental capacity to enter into the contract.
Every state, including New Jersey, has what is commonly referred to as a “statute of frauds,” a written law that identifies those types of contracts that will only be enforceable if in writing. In New Jersey, the following types of agreements are covered by the statute of frauds:
- Contracts involving an interest in land, including agreements for the purchase or sale of real estate, real estate broker or agent commission agreements and real property leases with a term of more than three years
- Any loan, grant or extension of credit by a person or entity in the lending business where the principal amount exceeds $100,000
- Any agreement by a creditor not to enforce or exercise contractual rights or remedies where the amount in controversy exceeds $100,000
- A promise or guarantee by one person to answer for or take responsibility for the debts or financial obligations of another person
- Prenuptial agreements entered into after February 19, 2007 that include any provisions related to property settlements
Contact Attorney Howard N. Sobel
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