We have discussed the definition of what a contract is in the state of Georgia. We’ve also discussed the different types of contracts in Georgia. And we’ve discussed rules for interpreting contracts here in Georgia.
Today we are going to discuss when a contract needs to be in writing. Another name for this is called “statute of frauds” which is a defense someone can use when they are sued for a breach of contract. It is a good defense because it keeps people from making up lies that aren’t true.
For example, even though a contract can at times be in the form of an oral agreement, what keeps my Uncle Bob from fraudulently filing a lawsuit and then telling a judge that I promised to pay him a million dollars in exchange for his rickety old shack that is falling apart? Obviously, I never would promise Uncle Bob, or anyone else that matter, one million dollars to buy their rickety old shack that is falling apart. But what keeps Uncle Bob or someone else from fraudulently claiming such an oral contract exists? Well, the answer lies in something called the statute of frauds: the requirement that certain contracts need to be in writing so you can prove the truthfulness of their existence and show that someone is not committing “fraud” by lying about a contract that does not exist.
The statute of frauds is set out in O.C.G.A. § 13-5-30 entitled “Agreements required to be in writing.” It says:
“To make the following obligations [requirements, legal promises, contractual responsibilities] binding on the promisor [the person who promised to do something in the contract agreement], the promise [also known as the contract] must be in writing and signed by the party to be charged [the person who is promising to do something] therewith or some person lawfully authorized by him [i.e. that person’s agent who has legal authority to enter into contracts on behalf of that person].
Here are the contracts that are required to be in writing:
(1) A promise by an executor [someone assigned to handle a will], administrator [someone assigned by the court to handle a person’s property after they die if there has been no will], guardian [someone who takes care of someone else], or trustee to answer damages out of his own estate [if someone is owed money because of an injury caused to them by someone who has died it would have to come out of what is known as their estate. This debt or judgment would have to be in writing, either by a court order or by a written contractual agreement.];
(2) A promise to answer for the debt, default, or miscarriage of another [if someone stopped paying/defaulted on their student loan their co-signer’s agreement to be responsible for that loan and to pay for it would need to be in writing];
(3) Any agreement made upon consideration of marriage, except marriage articles as provided in Article 3 of Chapter 3 of Title 19 [for example a prenuptial agreement];
(4) Any contract for sale of lands, or any interest in, or concerning lands [selling property to someone else, in the case of my example above, buying Uncle Bob’s rickety shack];
(5) Any agreement that is not to be performed within one year from the making thereof [if the job will take over a year to do something then it needs to be in writing];
(6) Any promise to revive a debt barred by a statute of limitation [the statute of limitations on a written contract is six years, so if at the seventh year you agreed to pay the debt you owed it would need to be in writing to be enforceable]; and
(7) Any commitment to lend money [a banker promising to loan a small business person a loan needs to be in writing].
Those are all the different types of contracts that must be in writing to be enforceable. The moral of this story is to make sure that you get contracts in writing. Even if they don’t fall under the statute of frauds, it is always better to have something in writing in the event of a business dispute. Better yet, because the law is so complex, it is very important to have a lawyer help you draft important contracts or and review important contracts before you sign them in order to protect your legal interests.