In this lesson we'll discuss the Statute of Frauds. This is the rule that requires some contracts to be in writing, and allows some contracts to be oral and enforceable. So we're going to learn what types of contracts need to be in writing in order to be enforceable. Okay, so I'm going to say it again, I'm going to say a million times, valid contracts must have agreements, consideration, contractual capacity, legality, and have to be in writing sometimes. And in this lesson, we're going to talk about when are those situations when contracts need to be in writing. As a general rule, all the contracts are perfectly valid and enforceable. So if I say, "I'll sell you my bike for a $100'' and you say, ''I accept'' we have formed a contract and it is enforceable. Now, there is a legal doctrine called the statute of frauds. This is an old timey word. Comes to us from the common law of England. The statute of fraud is just a rule that requires some contracts to be in writing in order to be enforceable. And there's a really great way that all law students learn to an acronym to tell us which types of contracts need to be in writing in order to be enforceable under the statute of frauds. And the acronym is "MYLEGS" so M-Y-L-E-G-S, each one of those letters stands for a word that helps us remember what types of contracts need to be in writing. So first, the M in "MYLEGS" stands for marriage. Now, some of the parts of the MYLEGS acronym are more common than others and this is one that's not super common. But promises in consideration of marriage need to be in writing in order to be enforceable. Now this is not, does that mean a promise to marry somebody, this means things like a prenuptial agreement. This is a promising consideration of marriage, we say ''Well, we're preparing to get married, let's make this prenuptial agreement.'' Those types of things need to be in writing. The Y in ''MYLEGS'' stands for year. Specifically, a contract that cannot be performed within one year must be in writing. Now this doesn't mean a contract that is unlikely to be performed within one year, it means a contract that cannot be performed in one year. So, if you have a lease that says, ''I agree to lease this property for five years.'' Can a five year lease be performed in one year? No. So it must be in writing. But if you own a factory that has a capacity of manufacturing 10 airplanes a year and you get a contract for the sale of a hundred airplanes, does that have to be in writing? Probably not because even though you can't make 100 airplanes in one year, it's not impossible. Maybe you could scale up really fast. The terms of the contract itself don't make it impossible for you to perform it within one year. So that would not fall under the Y in the MYLEGS. Now the L in ''MYLEGS'' stands for land. Every contract for the sale of any interest in land, whether it's a sale, a lease any interest in land and easement, all contracts with sale of land must be in writing. Now the E in ''MYLEG'' stands for executor and this is really very uncommon but we've got to have an E, we can't just have M-Y-L-G-S. That wouldn't be great and accurate. So we have this E for executor. If an executor of an estate when someone dies, promises to pay a debt of the deceased into the dead person out of the executors own personal funds, this promise has to be in writing. Like I said it, doesn't happen very often. The G stands for goods. The sale of goods in excess of $500. Now goods are just tangible movable items. So not land, not intellectual property. Things like coffee cups, and tables, and chairs and things that, those are goods. The sale of goods in excess of $500 must be in writing. And then finally, the S in ''MYLEGS'' stands suretyship. Suretyship is a fancy legal word that just means when you promise to be liable for someone else's debt, you're guarantee someone else's debt, if you do that you have to be in writing. So, say you're a parent and you co-sign a car loan for your child or something like that. You are acting as a surety for your child in that case and in order for that promise to guarantee your child's debt to be enforceable, it has to be in writing. Now when we say a contract has to be ''In writing'', what does that mean? We all kind of have in our minds this vision probably of like a piece of paper with a lot of legalities on it and a signature blank at the bottom, right? Now, that does certainly count as a written contract but that's not the only way that a contract can be written. Now, a written contract generally has to have a signature but it doesn't have to be like your formal signature, everything on ''Oh what's your signature look like?" Actually does it really matter. If basically any form of written expression of your name or your assent. So you can just sign an X, or even on an email, if an email has your name at the bottom that can count as a signature. So it doesn't have to be handwritten, it doesn't even have to be your name. Now when we talk about what makes a written contract? What if we have a bunch of different documents that all get combined into one contract? Now this concept is called integration. We have multiple documents that all come together to form one contract. You can have an express integration or an implied integration. In express integration, you specifically say in the contract, "Hey, we've got these other documents we've been working from, we're going to bring them all into the main agreement." We can have an implied integration where it's not expressly stated but it's implied that "Oh, there's something else that we're referencing or there's some other document that has been used in the preparation of this contract.'' A lot of contracts have what's called a merger clause in them. A merger clause says, ''This document is the final and complete contract between these two parties.'' Basically emerges any other agreements that we might have had out there into this one document. And a merger clause is usually effective to terminate any other agreements or negotiations that took place about the same subject. Now one important rule when it comes to written contracts is that if you have a written contract, there's this general rule called the Parol evidence rule, that spelled P-A-R-O-L. But it's pronounced porol. It's not porol like you think in porol like when you get out of jail and have to live in a halfway house or something like that. Parol evidence rule basically means oral evidence rule. Again, this comes from the English common law and the Parol evidence rule states that, ''If you have a written contract, any prior oral agreement that you may have made about this subject matter is not valid and enforceable unless it makes it into the written contract.'' Now, a few exceptions to the rule that some contracts must be in writing. So, not all contracts must be in writing but some must. But even if a contract is in the category of contracts that must be in writing, sometimes there are exceptions that allow them to not be in writing. First exception is called promissory estoppel. Promissory estoppel, terrific legal term, basically means that you reasonably relied on someone else's promise in a contract and it caused you some sort of detriment. Usually you spend some money in reliance and the other party says, ''Oh no! The promise, my promise wasn't in writing, I don't have to do it.'' Where you say, ''Look I spent all this money and I relied on your promise.'' That's promissory estoppel and we're going to enforce that contract even though it wasn't in writing when it should've been. Next exception to statute of frauds is called partial performance. If you make a promise to someone that should have been in writing, but it wasn't. But then you start performing your duties under that contract, but halfway through you think, ''Oh wait, I don't have to do this is not in writing.'' Well, guess what? You do. Because you started performing so are going to have to finish performing, cause a court will say, ''You're obviously meant to engage in a contract because you started performing out of the contracts we're just going to make you fulfill the rest of your duties.'' Next exception is if you admit that you had a contract, usually in court like in a deposition or testify in court something like that, if you admit that you had a contract, you can't use the statute of frauds as a defense to get out of that contract because you admitted under oath that it existed. And the last exception is in the context of sales of goods. Now in another module, we're going to talk a lot more about sales of goods and special rules that apply to those. But when it comes to the statute of frauds and the requirement that contracts must be in writing, there are special rules for goods. Tangible movable things like coffee cups and things like that. If a merchant is selling to a merchant, we're going to find merchant in another lesson. But if a merchant is selling to a merchant usually the statute of frauds does not apply even if those goods are more than $500, and then if goods are custom made, this is also an exception to the statute of frauds because we think that what manufacturer would make custom made goods if there's not about, if there's not a contract. So even if you don't make a written contract for custom made goods, if the manufacturer starts making them, we assume that they did so because you ordered them to do that and we're going to enforce that against you.
