Future Business Leaders of America (FBLA) Business Law Practice Exam

What is the primary purpose of the Statute of Frauds?

1. To prevent fraud in contracts

2. To limit time for legal actions

3. To enforce verbal contracts

4. To provide evidence for certain contracts

The correct answer is: To provide evidence for certain contracts

The primary purpose of the Statute of Frauds is to provide evidence for certain contracts. This legal framework was established to safeguard against fraudulent claims concerning agreements that are particularly significant and thus require special attention. By mandating that certain types of contracts be in writing to be enforceable, the Statute of Frauds ensures that there is clear, tangible evidence of the agreement, which helps establish the terms of the deal and the intent of the parties involved. Contracts that typically fall under the Statute of Frauds include those related to real estate, agreements that cannot be performed within one year, and contracts for the sale of goods above a certain value, among others. This requirement for written documentation serves to clarify disputes and provides a reliable means for courts to resolve issues surrounding the existence and terms of the contract. In contrast, options regarding the prevention of fraud in contracts or limiting the time for legal actions do not directly encapsulate the essence of the Statute of Frauds. While the Statute may reduce opportunities for fraudulent claims, its main focus is on evidence and documentation of significant agreements rather than outright prevention of fraud. Enforcing verbal contracts is also not aligned with the Statute's purpose, as it specifically requires written evidence for the enumerated categories of contracts