The New Jersey Statute of Frauds, R.S.25:1-1 to -9, like similar enactments in every state, derives from the Statute for the Prevention of Frauds and Perjuries passed by Parliament in 1677, 29 Charles II, c.3. The English Statute, a total of 24 individual sections, included provisions that required transfers of land to be in writing, discouraged transfers of land in defraud of judgment creditors, and imposed formalities on oral wills of personal property. The Statute also contained provisions which required certain types of agreements to be in writing in order to be enforceable.
The first five sections of the current New Jersey Statute, R.S. 25:1-1 to -5, derive directly from the English Statute. These five sections are those which require most transactions in land or interests in land to be in writing, and provide that certain enumerated types of agreements must be in writing in order to be enforceable. The language of these sections, taken verbatim from the English Statute in 1794, has been retained virtually intact through several complete revisions of the New Jersey statutes. The remaining four sections of the New Jersey Statute of Frauds were added in the nineteenth century. R.S. 25:1-6 and -7 broadened the substantive scope of the Statute by requiring agreements to pay certain debts to be in writing and R.S. 25:1-8 added a rule of construction applicable to the first seven sections. R.S. 25:1-9 governs in detail the writing required for a real estate broker to be entitled to a commission.
The New Jersey Statute of Frauds is in need of in-depth revision. While the Statute has been revised several times as part of comprehensive recompilation projects in the past, the archaic language and expression of the English original has largely survived, making the first five sections opaque and confusing to read. The Statute has been interpreted in a large body of case law that has so changed the meaning of the Statute as to render the literal language of some sections deceptive. In addition, a good deal of this interpretive case law is conflicting and inconsistent.
In the almost 200 years since the adoption of the Statute of Frauds in this State, as well as in other jurisdictions, both the wisdom and efficacy of some of the provisions of the Statute have been debated extensively. During this same time period, however, the Legislature has seen fit not only to add provisions to the original Statute, but also, particularly in recent years, to add similar provisions in other areas of the statutes. It is appropriate under the circumstances to examine the policy reasons underlying the original provisions and to determine whether, and to what extent, these policy reasons remain valid today.
In entitling this project, the Commission has deliberately avoided the use of the term "Statute of Frauds," by way of underlining the fact that limiting opportunities for fraud is only one policy that may be served by imposing a writing requirement. The Commission identified two additional policy reasons that could support the imposition of a writing requirement in certain types of transactions: Protection of consumers, and protection of the interests of third parties in land transactions. In addition, the Commission considered intensively whether the approach of the existing statute - a writing requirement - was the best method of achieving the policy goals that were identified, or whether the identified policy goals would be better served by imposing a higher standard of proof on transactions not reduced to writing.
The Commission's approach to each type of transaction covered by the existing statute was to identify the policy considerations that would support the imposition of a writing requirement, and then to determine the nature of the writing requirement, if any, that ought to be imposed. The Commission concluded that in some instances a rule requiring a writing was unnecessary, and to some extent subversive of the Statute's purpose to combat fraud. Given the sophistication of modern rules concerning discovery and proof, it is the Commission's view that the imposition of a high standard of proof rather than a rule would unfetter the courts and allow them to best achieve substantial justice in disputes over the validity of transactions.
As a result of this method of study the Commission's recommendations range from complete elimination of the writing requirement in certain transactions, modification of provisions concerning leases of real estate, trusts in real estate, and contracts for the sale of real estate, and substantial retention of the preclusive writing requirement in the case of conveyances of land and surety contracts.
See, e.g., C. 17:16C-21 through -28 (Retail Installment Sales Act requirement that every retail installment contract must be in writing and signed by both buyer and seller); C. 56:8-42 (Health Club Services Act requirement that every health club services contract must be in writing); N.J.S. 12A:8-319 (writing requirement for a contract for the sale of securities) and N.J.S. 12A:1-201 (the Uniform Commercial Code derivative of a section of the original Statute of Frauds).
This is not intended as legal advice or as a legal opinion in any way or matter.
| Paul Stillwaggon, For All Your Real Estate Needs Contact New Jersey Estates Real Estate Group E-mail: njestates@gmail.com Web: http://www.newjerseyestates.net 908-561-5492 (Paul S) 908-310-1358 (Cell) |
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