What follows are our general observations and opinions about which California contracts need to be in writing. This is not legal advice, it is not a definitive statement of California law, and every agreement depends on its own facts.
Most contracts in California do not need to be written down. An oral agreement can be perfectly enforceable, which surprises people who assume a handshake counts for nothing. But a defined set of agreements falls under what is generally called the statute of frauds, and as we read Civil Code section 1624, those are invalid unless there is a writing signed by the party to be charged.
The categories that matter most in practice are agreements that cannot be performed within a year, agreements to sell or lease real property for more than a year, promises to answer for someone else’s debt, agreements authorising a broker to buy or sell real estate for compensation, and certain loan commitments by institutional lenders.
The traps inside the categories
The list looks simple and is not. Two areas generate most of the disputes we see.
The one-year rule asks whether the agreement could possibly be performed within a year, not whether it was likely to be. Our reading is that an agreement of indefinite duration generally falls outside the rule, because it might end within a year. A two-year commitment falls inside it. This distinction catches people out constantly, because it turns on what was theoretically possible rather than what everyone expected.
Guaranties are the other. A promise to answer for another’s debt normally needs writing — which is why every commercial landlord insists on a signed personal guarantee rather than an assurance. There is a well-established exception where the promisor’s main purpose is to serve their own economic interest, and that exception is litigated more often than the rule.
What counts as a writing
Less than people expect. The statute generally requires a writing signed by the party being sued on it, containing the essential terms. It does not require a formal contract. In our experience courts have found sufficient writings in exchanges of emails, signed term sheets, and combinations of documents read together where they clearly refer to the same transaction.
California’s electronic transactions legislation also means an electronic signature is generally as good as ink. A negotiation conducted entirely over email, ending in “agreed — let’s do it” from a named sender, may well satisfy the requirement even though nobody thought they were signing anything. We would treat that as a risk in both directions: it can rescue a deal you thought was unenforceable, and it can bind you to one you thought was still under discussion.
The exceptions that rescue oral agreements
Failing the statute of frauds is not always fatal. Several doctrines can save an oral agreement, and they come up regularly:
- Part performance. Particularly in real property matters, conduct consistent only with the claimed agreement — taking possession, paying, making improvements — can support enforcement.
- Estoppel. Where one party reasonably relied to their detriment and enforcing the statute would work a serious injustice, courts have declined to apply it mechanically.
- Full performance. Where one side has fully performed, the policy behind the rule is weaker.
- Admission. A party who admits the agreement in pleadings or testimony has a harder time invoking the statute to escape it.
We would be candid that relying on these is expensive. They are fact-intensive, they rarely resolve on a quick motion, and litigating whether an agreement exists costs far more than writing it down would have.
How this shows up in Los Angeles practice
The recurring scenarios are familiar. A multi-year commercial lease agreed in principle over email with the formal document never signed. A business owner who verbally assured a supplier they would personally cover the company’s account. A commission arrangement with a broker or finder that everyone understood and nobody documented. A partner or investor promised a share of a property on a phone call.
In each case the underlying dispute is rarely about the statute of frauds as such — it is about what was agreed. The statute simply becomes the mechanism by which one side tries to escape a deal the other believes was struck.
Practical suggestions
Write it down, obviously — but more usefully, be deliberate about when you are agreeing. Say “subject to a signed agreement” in email if that is what you mean, because absent that qualifier an email chain can look a great deal like a contract. If you are on the other side and want to lock something in, get the essential terms and a name in writing early.
And where an agreement matters, get the essential terms right rather than merely present: parties, property or subject matter, price, and term. A writing that satisfies the statute but omits something material simply moves the fight from enforceability to interpretation.
Talk to us
If you are unsure whether something you agreed is binding, or someone is trying to walk away from a deal you thought was done, call us at (310) 556-9692. Contract review and drafting is transactional work, so we handle it on an hourly or flat-fee basis rather than on contingency, and we will give you a cost estimate before we start.
Related reading: our contract review and drafting resources, plus assignment and consent clauses and personal guarantees in California commercial leases.
This article reflects our own general views and opinions and is offered for information only. It is not legal advice, it is not a definitive statement of California law, and reading it does not create an attorney-client relationship between you and our firm. If the enforceability of an agreement matters to you, please speak with a lawyer about your particular circumstances.
TALK TO A LOS ANGELES ATTORNEY
Tell us what is happening and we will get back to you. Your consultation is free, and we will tell you honestly whether we think you have a case worth pursuing.
