People are often surprised at the amount of business conducted with little more than a conversation and a handshake. But if a deal falls apart, how enforceable is it in a court of law? It’s a common misconception that if there’s no written agreement, there’s no enforceable contract. Unfortunately for anyone trying to get out of a commitment this way, there may well still be a legally enforceable contract between the parties. In fact, Indiana contract law and the Indiana statute of frauds only require a few types of contracts to actually be in writing.
Contract Requirements under the Indiana Statute of Frauds
This requirement that certain agreements be reduced to writing is known as the statute of frauds. As explained by the Court of Appeals of Indiana in Knapp v. Estate of Wright, “the Statute is intended to preclude fraudulent claims that would probably arise when one person’s word is pitted against another’s and that would open wide the floodgates of litigation.”
Assessing statute of frauds exceptions and inclusions requires extensive knowledge of the Indiana Code and legal precedents related to Indiana contract law. Consulting an Indiana contract attorney is beneficial to anyone who needs guidance in these matters.
The Indiana Statute of Frauds Limits Certain Legal Claims
Generally, the Indiana statute of frauds prohibits a party from bringing a lawsuit unless the agreement is: (1) in writing; and (2) signed by the accused party. It applies to the following kinds of claims:
- Actions involving any contract for the sale of land;
- Actions charging a person with responsibility for the debt or default of another;
- Actions involving activities that are not intended to be completed within one year of the agreement;
- Actions charging an executor or administrator for damages out of the executor’s or administrator’s own estate; and
- The sale of goods at a price of more than $500.
The Statute of Frauds in Real Estate Transactions
There are few exceptions to the statute of frauds in real estate transactions. For agreements relating to the sale of land, the agreement must describe the following with reasonable certainty:
- Each party;
- The land that is the subject of the agreement;
- The terms and conditions of the promises; and
- By whom the promises were made.
But what do courts consider “reasonable certainty” to describe the land? Obviously, it is always preferable to be as precise as possible. But, based on the court’s explanation in Knapp v. Estate of Wright, the contract’s terms “may be abstract and of a general nature” so long as the land can be identified without being contradicted or added to. Consulting an Indiana contract attorney regarding questions about the statute of frauds in real estate contracts and transactions can help you better navigate the legal requirements in this area.
Indiana Contract Law Regarding the Sale of Goods
Indiana Code § 26-1-2-201 further expands the number of transactions that require a written agreement by adding any sale of goods for more than $500 to the list. Per Wehry v. Daniels, the purposes of applying the statute to agreements involving the sale of goods include the following:
- To prevent parties from acknowledging that an oral contract exists for the sale of goods while also citing the statute of frauds as a defense against enforcement of the contract; and
- To limit a party’s ability to conduct fraudulent activity using the statute of frauds.
For a sale of goods over $500, the only detail the writing must describe is the quantity. But, even in this case, a contract may still be deemed enforceable for reasons unrelated to the statute of frauds.
Indiana Statute of Frauds Exceptions
As with nearly any rule, there are several statute of frauds exceptions under Indiana contract law. In a contract for the sale of goods over $500, for example, a contract may be enforceable where the opposing party admits to its existence. Even in a contract for the sale of land, where proof of partial performance is clear and definite, it may take the contract out of the statute of frauds.
Generally, this proof of statute of frauds exceptions takes the form of some combination of the following, as cited in Perkins v. Owens:
- Payment of the purchase price or a part thereof;
- Possession of the property; and
- Lasting and valuable improvements on the land.
Promissory estoppel may also serve as a statute of frauds exception when a party has been injured so substantially and independently that it would be unjust and unconscionable to deny that party relief for failure to produce a written contract. Indiana courts, however, are reluctant to apply such doctrines and strictly construe the statute’s requirements, as evidenced by the Indiana Supreme Court’s ruling in Coca-Cola Co. v. Babyback’s Int’l, Inc.
Contact an Indiana Contract Attorney for Help Interpreting the Indiana Statute of Frauds
Indiana’s statute of frauds encourages parties to memorialize their agreements in a written document. This helps both the parties and the courts understand exactly what the terms of an agreement were and helps to prevent parties asserting fraudulent claims. However, this requirement applies only to certain transactions and can be overcome where an exception applies.
If you have a question about whether an agreement needs to be in writing or you otherwise need assistance applying the Indiana statute of frauds to your specific situation, see Corey Meridew, an Indiana contract attorney with the experience and knowledge to help. Get in touch with the Indiana law firm of Camden & Meridew, PC by calling 317-770-0000 or completing the firm’s online contact form.