Table of Contents
Summary: Key Takeaways
- The Minnesota Statute of Frauds prohibits the enforcement of oral contracts, except for certain exceptions.
- The Minnesota Statute of Frauds applies to contracts exceeding one year, real estate transactions, and contracts for the sale of goods.
- Written documentation is required for contracts lasting more than one year and commercial leases lasting longer than a year.
- Exceptions to the Statute of Frauds include partial performance, promissory estoppel, and specific exceptions provided by the UCC for the sale of goods.
The Minnesota Statute of Frauds
The Minnesota Statute of Frauds can be found in Minnesota Statutes sections 513.01 to 513.07. Here is the full text of the statute on July 17, 2023:
513.01 No Action on Agreement
No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:
(1) every agreement that by its terms is not to be performed within one year from the making thereof;
(2) every special promise to answer for the debt, default or doings of another;
(3) every agreement, promise, or undertaking made upon consideration of marriage, except mutual promises to marry;
(4) every agreement, promise or undertaking to pay a debt which has been discharged by bankruptcy or insolvency proceedings.
513.03 Grants of Trust, When Void
Every grant or assignment of any existing trust in goods or things in action, unless the same is in writing, subscribed by the party making the same, or by the party’s lawfully authorized agent, shall be void.
513.04 Conveyance of Interest in Land Except Up to One-Year Lease
No estate or interest in lands, other than leases for a term not exceeding one year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance in writing, subscribed by the parties creating, granting, assigning, surrendering, or declaring the same, or by their lawful agent thereunto authorized by writing. This section shall not affect in any manner the power of a testator in the disposition of real estate by will; nor prevent any trust from arising or being extinguished by implication or operation of law.
513.05 Leases; Contracts for Sale of Lands
Every contract for the leasing for a longer period than one year or for the sale of any lands, or any interest in lands, shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made, or by the party’s lawful agent thereunto authorized in writing; and no such contract, when made by an agent, shall be entitled to record unless the authority of such agent be also recorded.
513.06 Specific Performance
Nothing in this chapter contained shall abridge the power of courts of equity to compel the specific performance of agreements in cases of part performance thereof.
513.07 Logs; Extension of Time of Payment for Labor
Every agreement extending the time of payment for manual labor, performed or to be performed in cutting, hauling, banking, or driving logs, beyond the time of the completion of such labor, shall be void, unless such agreement, expressing the consideration, be in writing subscribed by the party to be charged therewith, and unless, at the time of making such agreement or completing such labor, the person for whom it is to be or has been performed deliver to such laborer a negotiable promissory note for payment of the agreed compensation, with interest. Every lien allowed by law on account of such labor shall pass by the transfer of such note, and be enforceable by the holder thereof.
In the realm of legal contracts, the Minnesota Statute of Frauds stands as an impenetrable fortress, erecting formidable barriers against the validity of oral agreements. Like a sentinel guarding the gates of justice, this statutory provision renders oral contracts null and void, unless they fall within certain narrow exceptions.
The Minnesota Statute of Frauds, a stalwart defender of written documentation, aims to ensure clarity, certainty, and enforceability in contractual relationships. This article delves into the intricacies of the statute, shedding light on its general rule as well as specific provisions related to contracts exceeding one year, real estate transactions, and contracts for the sale of goods.
By examining the exceptions that breathe temporary life into oral contracts, this analysis illuminates the boundaries of verbal agreements in the Land of 10,000 Lakes. As we navigate the treacherous waters of contractual obligations, let us explore the Minnesota Statute of Frauds and its impact on the legal landscape.
Statute of Frauds Overview: The General Rule
The Statute of Frauds in Minnesota prohibits the enforcement of oral contracts in certain circumstances, including contracts that take more than one year to perform, certain guarantees, contracts related to marriage, and debt discharged by bankruptcy. According to Minnesota Statute § 513.01, no action can be maintained upon any agreement unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party charged therewith. This means that parties must have a written contract for these specific types of agreements.
It is important to note that the Statute of Frauds issue must generally be raised by a party to that contract, usually the defendant in the lawsuit. Third parties, who are not parties to the oral agreement, cannot raise the Statute of Frauds defense unless they have a contract with one of the parties to the oral agreement or are directly impacted by it. Nonparties to an assignment, for example, cannot assert the statute of frauds in their favor, as stated in the case of Parkside Mobile Estates v. Lee, 270 N.W.2d 758, 762 n.4 (Minn. 1978).
The Minnesota Statute of Frauds restricts the enforcement of oral contracts in specific situations. Parties involved in contracts that take more than one year to perform, certain guaranties, contracts related to marriage, or debt discharged by bankruptcy must have a written agreement to be legally enforceable.
Contracts that Take Over 1 Year to Perform
Contracts that extend beyond a year’s duration necessitate written documentation, ensuring clarity and legal enforceability.
The Statute of Frauds requires a written contract when the parties’ performance takes over one year. According to the courts, the test for determining whether a contract is capable of full performance within a year is solely based on the contract’s terms, not the likelihood of such occurrence. Eklund v. Vincent Brass and Aluminum Co., 351 N.W.2d 371, 375 (Minn. Ct. App. 1984).
In the employment law context, if a contract has a defined term, such as 2 or 5 years, it cannot be performed within a year and must be in writing. Conversely, if the term is indefinite, such as ’employment until retirement’ or ‘permanent employment,’ it could be performed within one year and is not required to be in writing. This is because the employee could quit, retire, or even pass away within that year, resulting in the contract lasting less than a year.
Similarly, in the leasing context, a commercial lease lasting longer than a year must also be in writing, as stated in the specific statute relating to leases.
Therefore, it is important to put long-term contracts in writing to ensure compliance with the Statute of Frauds. While there may be exceptions to this requirement, it is considered best practice to have written documentation for contracts that take over a year to perform.
Real Estate Contracts
Real estate transactions often involve significant financial investments and complex legal arrangements that require clear and enforceable documentation.
In the state of Minnesota, the Statute of Frauds rule, as outlined in Minn. Stat. § 513.04, governs real estate contracts. According to this statute, any estate or interest in lands, trusts, powers, or any other contracts relating to lands must be in writing to be enforceable. The only exception to this rule is for leases that do not exceed a term of one year.
This requirement for written contracts in real estate is crucial in order to provide a level of certainty and protection to all parties involved. It ensures that the terms of the agreement are clearly defined and agreed upon by all parties, reducing the potential for disputes and misunderstandings. Additionally, written contracts can be recorded with the appropriate authorities, such as the Recorder’s Office, which further establishes and protects the rights of the parties involved.
Real estate litigation often arises when parties fail to comply with the Minnesota Statute of Frauds by entering into oral contracts for real estate transactions. In such cases, the lack of written documentation can make it challenging to prove the existence and terms of the agreement, leading to legal disputes and potential loss for the parties involved.
Therefore, it is crucial for individuals engaging in real estate transactions in Minnesota to adhere to the Statute of Frauds and ensure that all contracts related to land are properly documented in writing.
Contracts for the Sale of Goods (UCC Contracts)
Sales of goods under the Uniform Commercial Code (UCC) present a unique set of legal considerations that can significantly impact business transactions and potential litigation. The UCC provides a framework for contracts involving the sale of goods, which are defined as tangible items such as inventory and physical products.
Unlike contracts for services, contracts for the sale of goods can be subject to the UCC’s ‘mini’ Statute of Frauds. The UCC’s Statute of Frauds requires certain contracts to be in writing to be enforceable. However, the UCC does provide some exceptions to this requirement. For example, an oral contract for the sale of goods may still be enforceable if one of the parties admits in court proceedings that an oral agreement was made, or if the goods have been specially manufactured for the buyer and are not suitable for sale to others.
Despite these exceptions, it is generally advisable for parties involved in the sale of goods to have a written contract in place. A written contract provides clear evidence of the parties’ intentions and can help prevent misunderstandings or disputes. In the event of litigation, a written contract can also serve as a valuable piece of evidence to support a party’s claims or defenses.
Contracts for the sale of goods under the UCC are subject to specific legal considerations, including the UCC’s Statute of Frauds. While oral contracts may sometimes be enforceable, it is generally recommended to have a written contract in place to avoid potential disputes and to provide clear evidence of the parties’ agreement.
Exceptions to the Minnesota Statute of Frauds
Exceptions to the requirement of written contracts under Minnesota law can provide additional evidence of the existence of an oral agreement in certain circumstances. These exceptions are put in place to acknowledge that there may be instances where there is sufficient proof of an oral contract, even though it does not meet the formalities set forth by the Statute of Frauds.
One exception is partial performance. This occurs when one party has already partially performed their obligations under the oral contract. By doing so, they provide evidence of the existence of the contract and their intention to fulfill their obligations. For example, if a contractor begins construction on a project based on an oral agreement, their actions serve as proof of the contract.
Another exception is promissory estoppel. This doctrine applies when one party detrimentally relies on the oral contract to their detriment. In such cases, the courts may enforce the contract to prevent injustice. For instance, if a person relies on an oral promise of employment and incurs expenses in preparation for the job, the courts may enforce the agreement to avoid unfairness.
Additionally, the Uniform Commercial Code (UCC) provides certain exceptions to the Statute of Frauds for contracts involving the sale of goods. These exceptions are specific to UCC contracts and may vary from the general exceptions mentioned above.
While the Minnesota Statute of Frauds generally requires written contracts, there are exceptions that can allow for the enforcement of oral agreements. These exceptions, such as partial performance, promissory estoppel, and UCC exceptions, provide additional evidence of the existence of an oral contract in specific circumstances.
Frequently Asked Questions
What is the history behind the development of the Minnesota Statute of Frauds?
The history behind the development of the Minnesota Statute of Frauds is a fascinating tale marked by the relentless pursuit of justice and the desire to protect individuals from fraudulent practices. This legislative measure emerged as a response to the rampant abuse and deception prevalent in oral contracts.
By outlawing such agreements, the Minnesota Statute of Frauds aimed to establish a more secure legal framework, safeguarding the interests of both parties involved and fostering a climate of trust and transparency in contractual agreements.
Are there any penalties or consequences for violating the Minnesota Statute of Frauds?
Violating the Minnesota Statute of Frauds, which bans oral contracts, can result in a contract not being enforceable.
Parties who enter into an oral contract that falls within the statute’s scope may find themselves without legal recourse in case of a dispute. These oral contracts are unenforceable in court, leaving the parties vulnerable to potential financial loss.
It is crucial for individuals in Minnesota to adhere to this statute to protect their rights and avoid potential legal complications.
Can the Minnesota Statute of Frauds be waived or modified by the parties involved in a contract?
The Minnesota Statute of Frauds, which prohibits oral contracts, may be waived or modified by the parties involved in a contract. However, such waiver or modification must be done in writing and signed by the parties to be enforceable.
The purpose of the statute is to ensure the enforceability and reliability of contracts by requiring written evidence of the agreement. Therefore, any attempt to waive or modify the statute must comply with these requirements to be valid.
Are there any specific requirements or formalities that need to be followed when drafting a written contract under the Minnesota Statute of Frauds?
When drafting a written contract under the Minnesota Statute of Frauds, there are specific requirements and formalities that must be followed. These guidelines are aimed at ensuring the validity and enforceability of the contract.
For instance, the contract must be in writing and signed by the party against whom enforcement is sought. Additionally, it is important to include essential terms and adequately describe the subject matter of the agreement.
Adhering to these requirements safeguards the interests of all parties involved.
The Minnesota Statute of Frauds is a legal provision that prohibits the enforcement of oral contracts in certain situations.
It applies to contracts that take over one year to perform, real estate contracts, and contracts for the sale of goods.
However, there are exceptions to this rule, such as partial performance or promissory estoppel.
By requiring written evidence of these types of contracts, the Statute of Frauds aims to prevent fraud and ensure that parties have a clear understanding of their obligations.
In light of this, can you imagine the potential confusion and disputes that could arise without such a requirement?