The Statute of Frauds requires certain contracts to be in writing (or evidenced by a written note or memorandum signed by the party to be charged) to be enforceable in court. Covered agreements include: a sale of real property or an interest in it; an agreement that by its terms cannot be performed within one year from its making; a promise to answer for the debt or default of another (a guaranty); a lease of real property for more than one year; a sale of goods above a threshold value; and an agreement made in consideration of marriage. The statute does not make these contracts void — only unenforceable if the objection is timely raised. Crucially, it applies only to executory contracts (not yet performed); once a contract has been performed, wholly or partially, it is taken out of the statute, and a contract can also be ratified.
“It was only a verbal agreement” is a common defense — and for certain contracts, the law agrees: they must be in writing to be enforced. That is the Statute of Frauds.
What the Statute Requires
The Statute of Frauds requires certain contracts to be in writing, or at least evidenced by a written note or memorandum signed by the party to be charged, to be enforceable in court. Its purpose is to prevent fraud and perjury by requiring reliable written proof of important agreements.
Which Contracts Are Covered
Among the agreements covered are:
- A sale of real property or an interest in it;
- An agreement that, by its terms, is not to be performed within one year from its making;
- A promise to answer for the debt, default, or miscarriage of another (a guaranty);
- A lease of real property for more than one year;
- A sale of goods, chattels, or things in action above a threshold value; and
- An agreement made in consideration of marriage (other than a mutual promise to marry).
Unenforceable, Not Void
A key point: the Statute of Frauds does not make these contracts void. It makes them unenforceable — meaning a court will not enforce them if the objection is timely raised. If the party fails to object (for example, allows oral evidence of the contract without objection), the defense can be waived.
Only Executory Contracts
The statute applies only to executory contracts — those not yet performed. This is critical:
- Once a contract has been performed, wholly or partially, it is taken out of the Statute of Frauds; and
- So a party who has accepted benefits or partly performed generally cannot hide behind the lack of a writing.
For example, an oral sale of land where the buyer has paid and taken possession may be enforced despite the absence of a writing, because it is no longer executory.
Ratification
A contract infringing the Statute of Frauds can be ratified — by failure to object to oral evidence, or by acceptance of benefits under the contract. Ratification cures the defect and makes the contract enforceable.
Practical Takeaways
- The Statute of Frauds requires certain contracts (sale of land, guaranty, lease over one year, agreements not performable within a year, sale of goods above a threshold) to be in writing to be enforceable;
- These contracts are unenforceable, not void, and the defense can be waived or the contract ratified;
- It applies only to executory contracts — performance takes a contract out of the statute.
Frequently Asked Questions
What is the Statute of Frauds? It requires certain contracts to be in writing, or evidenced by a written note or memorandum signed by the party to be charged, to be enforceable in court, to prevent fraud and perjury over important agreements.
Which contracts must be in writing? Among others: a sale of real property, an agreement not to be performed within one year, a promise to answer for another's debt (guaranty), a lease of real property for more than one year, a sale of goods above a threshold value, and an agreement in consideration of marriage.
Does the Statute of Frauds make an oral contract void? No. It makes the contract unenforceable, not void, and only if the objection is timely raised. The defense can be waived, for example by failing to object to oral evidence of the contract.
Does the Statute of Frauds apply if the contract was already performed? No. It applies only to executory contracts. Once a contract has been performed, wholly or partially, it is taken out of the statute, so a party who has paid or received benefits generally cannot invoke the lack of a writing.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.