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What is the statute of frauds?

Whether you're a contractor or a supplier, when you work in the construction business, you deal with a lot of contracts. Contrary to popular belief, though, not all construction contracts have to be in writing to be considered enforceable. However, there is a concept and law called the statute of frauds whose aim is to help eliminate fraudulent claims.

So you don't have to have every contract in writing, but you'll certainly want to have the types of contracts that fall under the statute of frauds in writing. This is different for every state in the country, but there are some clear ones here in Florida:

  • Contracts for major construction projects that can't be finished within one year.
  • Credit agreements. This is primarily contracts that have to do with loans for construction projects.
  • Contracts used for when you sell physical real estate.
  • Sales for construction materials where the total exceeds $500.

It's important to note here as well that, in all the above cases, if a change is made to the contract or a clause is added, it must also be in writing for the court to consider it enforceable.

In the cases listed above, having a contract is practically a must, but it doesn't hurt to have contracts or agreements in writing to avoid any potential breach of contract claims. If you do feel there's been a breach of contract or a dispute over the terms of a contract, speaking with a lawyer who's well-versed in real estate law may be a good idea.

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