This is part one of a two-part series addressing why it is important to put a contract in writing. The first part addresses certain types of contracts that are legally unenforceable if not in writing.
Certain contracts and promises are void and unenforceable unless they are in writing and signed with an authorized signature by the party against whom enforcement of the contract is sought. The contracts that are void unless in writing by statute in Michigan (called the Statute of Frauds) include:
(1) an agreement that cannot be performed within one year from its making (although this does not prohibit an oral contract of indefinite term);
(2) a guarantee of the debts of someone else;
(3) an agreement to pay commission for the sale of an interest in real estate; and
(4) a contract for the sale of goods for $1,000.00 or more.
These are the most common but there are additional types of contracts that are also void unless in writing and signed. For example, an agreement with a bank about lending money must be in writing to be enforceable in court.
Because of this, it is important for agreements to be in writing and signed. What each party agrees to do for the other should be included, all pertinent terms should be specified, and the contract should be signed and dated by all parties.
For more information about the Statute of Frauds, review MCL §§566.132 and 440.2201, and contact us if you have any questions.
Part two of this series examines additional problems that arise when agreements are not in writing and signed.
