Let's say you and a friend have an agreement.
He wants to hire you for his new business, at an acceptable salary. In addition, he's willing to pay you $1,000 today as a starting bonus, if you promise to work for him for at least two years.
You shake hands. This is definitely a binding agreement since peppercorns have been exchanged: he hands you $1,000, and you promise to work for him for two years.
He forks over the $1,000, and you get to work. Six months later, you can't stand working for him. Can he sue you?
Probably not, because of something called The Statute of Frauds.
The Statute of Frauds is a law in every state that says certain contracts must be in writing to be enforceable in court.
The two most common categories of contracts that must be in writing:
1. A contract that involves the sale of real estate.
2. A contract that is performed over a period exceeding one year.
Since the agreement with your friend was meant to occur over two years, it must be in writing if your friend wanted to sue you in court.
BONUS LESSON: Conducting business with friends and family can be treacherous. Beware.
Check out the work-in-progress book 'Street Smarts 101: Lessons Textbooks Miss.'
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