From joint ventures to key suppliers, your professional relationships matter. As do the agreements that act as a foundation of these relationships. When it comes to the statute of frauds, Nevada companies look to Hone Law to minimize their risk and avoid the misunderstandings that lead to costly business disputes and commercial lawsuits.
Our deep experience as commercial litigators, keen awareness of industry trends, and multi-point perspective allows us to bring our clients better ideas and legal advocacy. We pair our fluency in the market dynamics that impact your company with our record of success to help our clients prevail. To learn more about the Hone Law approach, consider contacting our team at (702) 608-3720 today.
What is a Statute of Frauds?
A statute of frauds is a legal concept that requires that certain contracts be formalized in writing. If these contracts are not formalized in writing, they are considered non-binding and are not legally enforceable. Typically, agreements involving the sale of land or goods valued at over $500 are covered by the statute of frauds. Contractual agreements lasting more than one year are also generally covered under this legal doctrine.
What Is the Purpose of the Statute of Frauds?
The purpose of the statute of frauds is the prevention of fraud and other damages. Not only will parties act more intentionally and seriously in their transactions, but they will also have legally binding documentation that a legally binding agreement exists in the event of a dispute or conflict.
Is the Statute of Frauds Included Under Nevada Law?
Statutes of fraud were originally adopted as an informal concept. Many states, Nevada included, have since acknowledged the concept in statutory law. In the relevant laws governing statute of frauds, Nevada legislation specifies that these contracts are not valid if they are not in writing:
- Agreements involving real estate, other than leases for a term less than one year (NRS 111.205).
- Contracts that cannot be performed within one year (NRS 111.220).
- Promises to take on the debts of another person (NRS 111.220).
- Agreements to lend money or provide credit for $100,000 or more in principal amount, when these agreements are made by parties in the business of providing credit or loans (NRS 111.220).
- Promises to pay a fee of $1,000 or more for a loan or credit extension (NRS 111.220).
- Contracts for the sale of goods that exceed $500 (NRS 104.2201).
Because of the requirement that contracts be formalized in writing; statute of fraud laws can influence business litigation. Indeed, when leveraged correctly, the statute of fraud can serve as a valuable defense in a breach of contract claim. At Hone Law, we have effectively used statute of frauds to enforce the validity of contracts and protect our clients’ business interests in breach of contract disputes.
Are there Any Exceptions to the Statute of Frauds?
In some cases, agreements that would ordinarily be covered by the statute of frauds may be enforceable without a written contract. Some common exceptions to the statute of fraud may include:
- One party has partially fulfilled the terms of an oral contract and there is an inability to return the parties to the pre-contract state.
- Both parties admit that an oral contract was made.
- A seller has made a substantial beginning to produce custom goods.
- One party has faced detriment due to the other party failing to fulfill their contractual obligations. This concept is known as promissory estoppel and allows the injured party to enforce the contract if they are able to show that they justifiably relied on the other party.
What Must Be Included in a Written Contract?
Based on the statute of frauds, Nevada companies must have a well-drafted written contract in a range of situations to mitigate risk and professional liability. The following are included among the most critical elements of a written contract:
- A well-structured format that includes an offer, the acceptance of that offer, and the consideration, which is typically monetary compensation. A valid contract cannot violate the law or involve a fraudulent transaction.
- Identification of all parties involved in the transaction, whether corporate or individual. Full legal names should be used.
- Explanation of fees and timeline of services. By what date should the work be started and completed? When is payment required? A well-drafted contract should outline these terms.
- Scope of the work, including each party’s obligations and responsibilities. What type of work or services are being provided and are there any potential limitations?
- The duration of the contract and what to do in the event of a breach. As a means of protection, it is vital to outline precisely when the contract will be terminated or how the contract can be terminated in the event of continuing services. It can also help to include provisions regarding disputes, including which jurisdiction the dispute will be adjudicated in, whether attorney’s fees will be awarded, and whether alternative dispute resolution is necessary.
- Signature from all parties involved. All parties should keep a copy of the contract for future reference.
Do I Need an Attorney to Draft a Contract?
While there is no requirement written in law stating that attorneys must draft all contracts, there is a reason why successful companies work with lawyers to review, draft, and negotiate key agreements. You may know about the industry, but do you understand the right strategy to limit your liability, protect your intellectual property, and terminate a contract without major financial repercussions? Your attorney will draft contracts that are favorable to your business interests and ensure that all provisions benefit your bottom line.
Evaluating Existing Contracts: Mitigating Risk Before Disputes Arise
While our firm doesn’t specialize in drafting contracts from scratch, we can be a valuable resource for businesses that already have agreements in place. Our experienced legal team can meticulously evaluate your existing contracts to identify potential litigation risks. This proactive approach can save you significant time and money in the long run. By pinpointing ambiguities, unfavorable terms, or unenforceable clauses, we can help you understand your rights and obligations within the contract. This knowledge empowers you to make informed decisions about potential renegotiation or prepare a strong defense should a dispute arise.
When It Comes to the Statute of Frauds, Nevada Companies Look to Hone Law
The most innovative companies look for attorneys who align with their values, especially when drafting and enforcing the contracts that are used to manage their day-to-day operations and multi-million-dollar deals. At Hone Law, we prioritize flexibility and agility in every facet of our work, including the agreements we negotiate on behalf of our business clients.
Our team of experienced attorneys evaluates industry trends and leverages a rich understanding of the statute of frauds in Nevada to better serve the companies that do business here. To learn more about how we can advocate for you, get in touch with us at (702) 608-3720.