The "Statute of Frauds" refers to a number of statutes in the United States and other common law countries which require that certain contracts be in writing. It is a defense to the formation of a contract, meaning that if someone sues you for breach of contract, you can counter-argue that the Statute precludes enforcement of the contract.
In practice, the Statute is rather aspirational law. When a legislature passes such a statute, it is generally because they want people to make their agreements crystal clear for later interpretation. Judges hate to apply the Statute because it is a pure technicality--a way for someone to get out of an otherwise enforceable agreement. So while it is a valid legal defense, it is usually one of the last defenses someone will attempt to raise, simply because it sounds shady for a person to say "Well, yes, we had an agreement, but according to section X of law Y you were supposed to make me write it out and sign it." That's the sort of argument that will likely lead to a finding of promissory estoppel, quantum meruit or another remedy on the fringe of contract law.
(In practice, you should always put your contracts in writing anyway.)
The original Statute was formally known as "An Act for the Prevention of Frauds and Perjuries," and was passed by the Parliament of England in 1677. (England repealed most of the Act in 1954, so the Statute of Frauds has little relevance there nowadays.) Section 4, which is still the basis of the Statute of Frauds in many other places, reads as follows:
No action shall be brought whereby:
unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some person thereunto by him lawfully authorized.
- To charge any executor or administrator upon any special promise to answer damages out of his own estate;
- To charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person;
- To charge any person upon any agreement made upon consideration of marriage;
- To charge any person upon any contract or sale of lands, tenements or hereditaments or any interest in or concerning them; or
- To charge any person upon any agreement that is not to be performed within the space of one year from the making thereof;
Most U.S. states later adopted this section in its entirety. Many added other types of contracts to the list of contracts that must be "in writing" and "signed." Depending on the state, this list might include:
- Agreements for the sale of goods over a certain amount (under the Uniform Commercial Code, $500)
- Agreements that are not enforceable against either party during his or her lifetime
- Sales warranties
- Government bids
- Consumer loans
- Contracts for the purchase of edible nuts (part of the statute in California)
"In writing" generally means that the document must specify the subject matter of the contract, indicate the parties to the contract and specify the essential terms of the unperformed promises in the contract. Electronic documents may be considered written, but courts have been split on this point, and some statutes have adopted the term "record" instead to make electronic contracts more easily enforceable.
"Signed" does not necessarily mean a proper signature, but rather any symbol used by a party for authentication purposes. A letterhead may constitute a signature, for instance. The only person who has to sign is the person against whom the contract is being enforced.