Understanding the Statute of Frauds in Contract Law
What is the significance of the Statute of Frauds in contract law?
The Statute of Frauds plays a crucial role in ensuring the validity and enforceability of certain types of contracts. By requiring these contracts to be in writing and signed by the parties involved, it helps prevent misunderstandings and disputes.
Answer:
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Commercial Bank's promise enhanced its mortgage interest, hence it should pay Acme
The Statute of Frauds requires certain types of contracts to be memorialized in writing and signed by all the parties that are bound by the contract with sufficient content to evidence the contract.
Here, Matrix, Inc. is the general mortgage contractor for a large commercial building project and subcontracted with Acme Flooring, Inc. to install flooring. When Matrix failed to make payments to Acme as agreed, Acme stopped working. Commercial Bank, the project lender, orally promised Acme that they would pay whatever Matrix failed to pay if Acme resumed work. Acme finished the flooring but was still not paid.
According to the Statute of Frauds, Commercial Bank is liable to pay Acme as they made an oral promise related to the mortgage interest enhancement in the contract. This promise falls under the statute's requirements for written documentation and is enforceable.
In conclusion, the Statute of Frauds ensures that important contracts are documented properly to avoid disputes and confusion, and in this case, Commercial Bank's promise to pay Acme is legally binding under the statute.