Are you buying or selling real estate? Do you have a large purchase contract? Are you purchasing customized goods? Are you contracting a service that will take longer than a year to complete? Have you ever heard the term “Statute of Frauds,” but have absolutely no idea what it means? GLO offers one hour consultations to review and prepare contractual agreements that comply with Colorado’s Statute of Frauds and are enforceable in court.

What is the Statute of Frauds?

First, we’ll start with the basics. The Statute of Frauds is a barrier that some contracts must meet to become legally binding. The Statute of Frauds requires certain contracts to be in writing. The goal is to prevent false assertions about a contract that was never really created.

What types of contracts does the Statute of Frauds apply to?

Under the Statute of Frauds, the following situations require a written contract to be enforceable:

Real estate sales
Real estate lease agreements lasting longer than one year
Property transfers after the owner’s death
Contracts which, by their terms, cannot possibly be performed within one year
Agreements to pay someone else’s debt
Contracts that last longer than the life of a party
A contract for the sale of goods over $500
A contract made in consideration of marriage (such as a prenuptial agreement)
Not all contracts involving real property are automatically in the Statute of Frauds world. Only contracts transferring an interest in the property fall under this umbrella.

Are there any Colorado-specific Statute of Frauds laws?

In addition to the contracts listed above, Colorado's Statute of Frauds also prohibits a debtor or creditor from filing or maintaining a claim relating to a credit agreement that is in excess of $25,000, unless the claim is in writing and is signed by both parties. A “credit agreement” is any contract or promise to extend or receive credit or to make any other type of financial accommodation. Additionally, contracts to lease goods with a value of over $1,000 are included in Colorado’s Statute of Frauds.

Why do these particular contracts need to be in writing?

Practical reasoning drives the requirement for written agreements over oral ones. The Statute of Frauds makes the parties more cautious about their agreements. If you write down your agreement, there is a lower chance of confusion and ambiguity in the future, and writing it down helps provide clarity to the overall purpose of the contract.

Another reason for the written requirement is to prevent dishonesty in the case of a later lawsuit. If a contract is purely oral, the details of the agreement become subject to a ‘he said, she said’ situation. The details are not written down, so lying about the substance of the contract becomes easier when it is oral.

If the original contract is modified, does the modification also need to follow the Statute of Frauds?

If a contract that previously met the requirements of the Statute of Frauds requires a modification, the modification does not automatically have to abide by the Statute of Frauds as well. The modification’s effect on the contract must be analyzed. If the new contract falls into one of the previously mentioned categories, then the Statute of Frauds will apply to the modification. If not, there is no Statute of Frauds requirement.

Are there any exceptions to the Statute of Frauds?

There are a few exceptions that allow for an oral agreement to be upheld despite Statute of Frauds requirements. These exceptions include partial performance and promissory estoppel. Furthermore, if an oral amendment is made to a written contract, the oral amendment can be upheld so long as a material part of the contract is not disturbed. For both exceptions, it requires that one party begin working or materially change positions. It is safer to rely on an enforceable written agreement before any dispute could potentially arise than hope an exception applies.

How can GLO help?

If you are entering into an agreement, regardless of whether it is required to be in writing per the Statute of Frauds, GLO offers one hour consultations to review and prepare any contract provisions to ensure you understand your rights and obligations.

If you are making an agreement that would be governed by the Statute of Frauds, it is imperative that you have competent legal counsel, like GLO, ensure that your agreement is enforceable in a court of law.

Please fill out an Intake Form to inquire about working with GLO.

GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific fee arrangements and signed engagement letters. GLO does not guarantee any results.

Statute of Frauds: When Yes! and a Handshake Aren’t Enough to Seal the Deal