The purpose of a statute of frauds the purpose of a

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and enforce the contract in the absence of a written agreement. The Purpose of a Statute of Frauds The purpose of a "statute of frauds" is, as the name suggests, to prevent injury from fraudulent conduct. There is some criticism of the continued existence of these statutes, as they are often used by parties who freely entered into fair contracts yet wish to avoid having to fulfill their agreements. At the same time, the abuses these statutes were designed to prevent are quite real, so a strong argument remains to keep them in place. It is also arguably good public policy to require that parties to certain significant transactions, such as those of long duration or which involve real estate, reduce their agreements to writing. A writing will both reduce the chance of future litigation, and also give the parties the opportunity to take a second look at the terms and conditions of their agremeent before it becomes final. The Effect of a Statute of Frauds A statute of frauds does not of itself render a contract void. The statute makes certain contracts "voidable" by one of the parties, in the event that the party does not wish to follow through on the agreement. (A contract that is "void" cannot be enforced. A contract that is "voidable" remains valid unless one of the parties chooses to void the contract.) Sometimes, a party to a contract that would otherwise be invalid under a "statute of frauds" will nonetheless be able to enforce it, on the basis of "partial performance" or "promissory estoppel". Where "partial performance" exists, a party who has accepted partial performance by another party under the contract will typically be barred from asserting the "Statute of Frauds" in order to avoid meeting its own contractual obligations.
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Mac Costas ATTN: Michael Wade 8999 e Vista Dr. GBS 205 - 13488 Scottsdale, AZ 85250 Legal, Ethical, and Regulatory Issues in Business 480.200.4107 [email protected] Promissory estoppel exists where significant inequities (unfairness) would result from releasing a party from the contract, and the party seeking release knew or reasonably should have known that those inequities would be created at the time of the original agreement. For example, where the party which seeks to be released knew that the other party would incur significant expense in obtaining materials which cannot be transferred to other work, a court may find that under the circumstances the contract should be enforced despite the statute of frauds. As previously noted, if all parties agree that they are bound by the contract, the contract will remain enforceable despite the statute of frauds. Promissory estoppel A doctrine in which a non contractual promise may be made enforceable to avoid an injustice.
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  • Fall '10
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