two people talking to each other

When two or more parties want to formalize an agreement—whether it’s for a major purchase, employment terms, or a real estate transaction—one of the first questions often asked is: Do contracts have to be in writing? The short answer is: it depends. Certain agreements must be documented in writing under the Statute of Frauds, while others can be valid and enforceable even if made verbally. Below, we explore the key principles of contract formation, when a written document is legally required, and why having a written agreement is often a good idea regardless.

The Basics of Contract Formation

A contract is a legally binding promise or set of promises. In most jurisdictions, including Arizona, a valid contract requires the following elements:

  1. Offer: One party proposes specific terms.
  2. Acceptance: The other party agrees to those exact terms.
  3. Consideration: Something of value is exchanged (e.g., money, goods, services).
  4. Capacity: The parties must have the legal ability (e.g., age, mental competence) to enter into a contract.
  5. Legality of Purpose: The subject of the contract must not violate the law or public policy.

Technically, a contract can be oral or written, as long as these elements are met. However, the Statute of Frauds in Arizona and most other states dictates specific situations where a written contract is legally required.

What Is the Statute of Frauds?

The Statute of Frauds is a legal concept dating back centuries. Its purpose is to prevent fraud and misunderstanding by requiring certain types of agreements to be in writing. While the exact rules can vary by state, in Arizona, the following types of contracts generally must be in writing to be enforceable:

  1. Real Estate Transactions: Contracts for the sale or transfer of land or interests in land (including leases longer than one year) typically must be written.
  2. Contracts That Cannot Be Performed Within One Year: If the agreement, by its terms, cannot be completed within one year, it should be in writing.
  3. Promises to Pay Another Person’s Debt: A written agreement is needed when one party agrees to pay the debt of someone else (also known as a guarantee).
  4. Marriage-Related Contracts: Some prenuptial or postnuptial agreements require writing.
  5. Sale of Goods Valued at $500 or More: Under the Uniform Commercial Code (UCC), contracts for the sale of goods worth $500 or more often require a written document, with certain exceptions.

If a contract falls under the Statute of Frauds but is not put in writing, the agreement is typically unenforceable in court—meaning that if a dispute arises, the parties cannot rely on the courts to uphold their verbal understanding.

Electronic Contracts Are Still “In Writing”

With the rise of electronic commerce, it’s important to note that a contract can still be considered “in writing” even if it’s in electronic form. Under the Electronic Signatures in Global and National Commerce Act (E-SIGN) and the Uniform Electronic Transactions Act (UETA)—which Arizona has adopted—electronic signatures (e.g., typing your name, using a mouse or touchscreen to sign, clicking “I agree”) can be legally valid. Therefore, an emailed or digitally signed agreement often satisfies the requirement for a written contract.

Oral Contracts: Valid But Risky

When a contract does not fall within the Statute of Frauds, it can generally be made verbally. For instance, an agreement to buy a used couch for $100 between two private parties doesn’t require a writing. However, even if an oral contract is enforceable, it often poses significant risks:

  • Proof of Terms: If a dispute arises, proving the exact terms of the oral agreement can become a “he said, she said” dilemma.
  • Misunderstandings: Without a clear written record, parties may recall or interpret terms differently over time.
  • Lack of Specificity: Important details (e.g., deadlines, payment methods, delivery responsibilities) can be overlooked or misunderstood when not clearly spelled out in writing.

Benefits of Having a Written Contract

Even in cases where a written contract is not legally required, putting agreements in writing provides substantial advantages:

  • Clarity: Ensures both parties understand the obligations, scope, and expectations.
  • Proof of Intent: Documents the specific terms in case of a dispute.
  • Reduced Risk: Written agreements decrease the likelihood of lawsuits or misunderstandings.
  • Professionalism: Demonstrates good faith and seriousness about the transaction or arrangement.

What If You’re Unsure?

If you’re unsure whether your agreement must be in writing, it’s wise to:

  • Consult an Attorney: A qualified legal professional can clarify whether the Statute of Frauds applies to your situation and help you draft or review an agreement.
  • Err on the Side of Caution: In many scenarios, having a written contract is the safest option. Put your arrangement in writing to avoid complications down the road.

Final Thoughts

While not all contracts are required to be in writing under Arizona law, some important types—such as real estate agreements and certain high-value transactions—must be documented in order to be enforceable. Even if the law does not mandate it, having a written agreement can save you from costly disputes and misunderstandings.

If you have questions about contract requirements or need assistance drafting or reviewing a contract, reach out to the Arizona Legal Center. We provide free legal consultations to help Arizona residents understand their rights and obligations.

—

Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For specific concerns about your situation, please consult a qualified attorney or contact the Arizona Legal Center for guidance tailored to your needs.