How Should the Statute of Frauds Apply to Reliance-Based Contracts?
13 Pages Posted: 16 May 2022 Last revised: 23 Jun 2022
Date Written: May 1, 2022
The “sufficient writing” requirements of the Statute of Frauds were formulated with bargain-based contracts in mind. It is often difficult if not impossible for persons to meet those requirements for reliance-based contracts, since this would require them to produce a writing signed by the promisor that not only evidenced the promise but also provided sufficient evidence of the forseability of their subsequent reliance, the fact of their reliance, and that failure to enforce the promise would be unjust to them.
There are several ways courts can avoid the harsh results of applying the usual Statute of Frauds criteria to reliance-based contracts: 1) regard promises made binding through reliance as not constituting “contracts;” 2) relax the “sufficient writing” requirement for reliance-based contracts to require only evidence that the promise was made; or 3) estop the promisor from asserting a Statute of Frauds defense, under appropriate circumstances. This short article argues that the third approach is the best one for courts to pursue, and that sufficient guidance for courts as to when to apply estoppel is provided by Section 139 of the Restatement (Second) of Contracts.
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