When is a Contract Required to be in Writing in Tennessee?

The Statute of Frauds

In Tennessee, a contract must be in writing in certain situations. This requirement is a legal doctrine is commonly known as the Statute of Frauds. The Statute of Frauds requires that certain contracts must be in writing in order to be enforceable. Knowing when a contract must be in writing in Tennessee is essential to ensure that any agreements are legally binding. In this post, we will discuss the requirements for when a contract must be in writing in Tennessee.

Real Estate Contracts

In Tennessee, any contract for the sale or purchase of real estate must be in writing in order to be enforced. The statute of frauds for real estate can be found at § 29-2-101(a) The statute of frauds is pretty clear that the sale of real estate must be in writing in Tennessee. The statute states: “upon any contract for the sale of lands, the promise or agreement, upon which 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 other person lawfully authorized by such party.” This includes any contracts for the purchase, sale, lease, exchange, or other disposition of real estate. This applies even if one of the parties attempts to deny that there was an agreement or that they only agreed orally. Without a written contract, there is no evidence of an agreement, and it will not be enforced by the courts. Any agreements related to the sale or purchase of real estate must be made in writing and signed by both parties to be valid. If a contract for the sale or purchase of real estate is not in writing, it is not enforceable by law. The courts have reasoned that “the primary purpose of the Statute of Frauds is to reduce the risk of fraud and perjury associated with oral testimony.” Smith v. Hi-Speed, Inc., 536 S.W.3d 458.

Contracts Involving the Payment of Money

Under Tennessee law, any contract that involves the payment of money must be in writing. This includes loan agreements, contracts for the payment of services or goods, and contracts for the sale or transfer of real estate. Generally, the only exceptions to this rule are if a contract is implied from a verbal agreement or if a verbal agreement is acknowledged in some way by a written document. However, in order to protect yourself from any potential issues down the line, it is highly recommended to have any contracts involving the payment of money be put in writing.

By having a contract in writing, it provides both parties with a clear understanding of the terms of the agreement as well as giving them a legal recourse should either party fail to abide by the contract. In Tennessee, any contract that involves the payment of money must include certain essential components such as the full names of both parties, the amount of money involved, and the method of payment. In addition, any contract should also include provisions that address what happens if either party fails to fulfill their obligations under the agreement.

Having a contract in writing is a critical part of any agreement involving the payment of money. It ensures that both parties are aware of their rights and obligations and provides legal protection should any issues arise in the future. By putting a contract in writing, both parties can rest assured that their agreement will be honored and that their interests will be protected.

Contracts for the Sale of Goods

In Tennessee, any contract for the sale of goods valued over $500 must be in writing to be legally binding (the Statute of Frauds). If the sale is for a good that has a price tag of less than $500, there does not need to be a written contract for the transaction to be legally valid. However, it is always recommended that all transactions, regardless of the monetary value, be documented in writing so that the expectations of both parties are clear and there is evidence of an agreement if needed in the future.

The Statute of Frauds for goods can be found at Tennessee Code § 47-2-201, which states that when parties enter into a contract for the sale of goods valued at $500 or more, “the contract is not enforceable by way of action or defense unless there is some writing or record sufficient to indicate that a contract for sale has been made.” This means that if the transaction is not written down, the courts may be unable to enforce the terms of the contract.

It is important to note that the Tennessee Code § 47-2-201 states that all contracts made in writing must contain the full names of all parties involved in order to be legally binding. Furthermore, the signature of the party being charged with fulfilling the obligations of the contract must also be included. However, THERE ARE EXCEPTIONS if the contract is between merchants, there are exceptions under Tennessee Code § 47-2-201(3) as this the Best Signs, Inc. v. Bobby King Design Team, Inc., case demonstrates.

Overall, it is important to remember that any contract for the sale of goods over $500 must be in writing to be legally binding in Tennessee. By having a contract in writing, both parties involved are protected in case either party fails to fulfill their part of the agreement. If you have questions about the exceptions, you need to consult with an attorney.

Service Contracts

In Tennessee, service contracts must be in writing if they involve more than $500 or if they are to be performed over a period of one year or longer (Statute of Frauds). For example, if you are hiring someone to paint your house and the cost exceeds $500 or the job is expected to last for more than one year, then a written contract is required. The contract should include all of the details of the services that will be provided, payment terms, and any other provisions related to the service. Additionally, in order for the contract to be legally binding, it must be signed by both parties. Failing to have a written contract could mean that either party may not be able to enforce their rights if something goes wrong with the service being provided. As such, it is always important to get a contract in writing when hiring someone to provide services.

When it comes to Service Contracts with contractors, make sure the contractors have either a home improvement license, or a contractors license.

Keep reading