When Written Contracts Are Required in Alabama

Generally, verbal contracts can be enforced in Alabama as if they were written. However, some contracts are so important that the law requires them to be written and signed before either side can enforce them.

This legal doctrine is known as the Statute of Frauds. Its objective is to prevent fraud and perjury by requiring reliable, written evidence for specific types of high-stakes transactions. Rather than relying on conflicting memories or oral testimony, the law mandates that these agreements be memorialized in a signed writing to be valid.

Below is a comprehensive guide to understanding which agreements must be in writing under Alabama law, the exceptions to the rule, and what remedies exist if you find yourself with an unenforceable oral agreement.

The General Rule: Contracts That Must Be in Writing

Under Alabama Code § 8-9-2 and related statutes, specific agreements are considered void unless they are in writing and signed by the party responsible for the obligation (or their lawfully authorized agent).

If you are entering into any of the following agreements, a formal written contract is required:

Real Estate and Land: Any contract for the sale of land, tenements, or “hereditaments” (inheritable property), or any interest in them. This includes agreements to release property from a mortgage.
Long-Term Agreements: Any agreement that, by its terms, cannot be performed within one year from the time it was made.
Debts of Another (Surety/Guaranty): A special promise to answer for the debt, default, or miscarriage of another person.
Lending Money: Commitments to lend money, delay repayment, or forbear repayment, provided the principal amount is $25,000 or more (commercial or large consumer loans).
Wills and Inheritance: Contracts to make a will, not to revoke a will, or to die intestate.
Marriage Consideration: Prenuptial agreements or promises made in consideration of marriage.
Executor Promises: A promise by an executor or administrator to pay damages out of their own personal estate.
Securities: Agreements for the sale or purchase of securities (stocks), unless traded on a national exchange.
Sale of Goods (UCC): Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more must be in writing.

Making the Contract Enforceable: Statutory Exceptions

Even if an agreement falls under the Statute of Frauds, specific legal “loopholes” or exceptions may allow the court to enforce the oral contract as if it were written.

1. The “Part Performance” Exception (Land Sales)

An oral contract to sell land may be enforced if the buyer meets two strict requirements:

Payment: The buyer has paid the purchase money (or a portion of it); AND
Possession: The seller has put the buyer in possession of the land.

2. Full Performance

If one party has fully performed their obligations under the agreement, the Statute of Frauds generally does not apply, and the other party can be compelled to perform.

3. UCC Exceptions (Goods)

Oral contracts for goods over $500 may be enforced if the goods were specially manufactured (custom), if the party admits the contract in court, or if payment was made and accepted.

What if the Contract is Unenforceable? (Equitable Remedies)

If the court determines that your oral agreement violates the Statute of Frauds and no statutory exception applies, the contract is void. You cannot sue for specific performance or breach of contract damages.

However, this does not mean you are left with zero recourse.

Alabama law recognizes non-contractual claims based on principles of equity. These claims ensure that one party is not unjustly enriched at the expense of another simply because a technicality voided the contract.

1. Unjust Enrichment and Quasi-Contract

A “quasi-contract” is a legal fiction created by the court to prevent injustice. It applies when there is no valid written contract, but one party has received a benefit that, in equity and good conscience, they should not retain without paying for it.

To succeed on this claim, you must prove:

You provided something of value to the defendant;
The defendant knowingly accepted and benefited from it; and
It would be unjust for the defendant to keep the benefit without paying.

2. Quantum Meruit (Recovering for Work Done)

Quantum meruit is Latin for “as much as he deserves.” If you performed services under an unenforceable oral contract, you can recover the reasonable value of your labor.

Example: You orally agree to renovate a building for a set price. The owner refuses to pay, citing the Statute of Frauds. While you cannot sue for the agreed-upon contract price, you can sue under quantum meruit for the fair market value of the materials and labor you provided.

3. Money Had and Received

If you paid money under a void oral agreement, you may bring an action for “money had and received.” This is founded on the principle that no one ought to enrich themselves at the expense of another. If the defendant holds money that belongs to you in equity and good conscience, the law implies a promise to return it.

Final Thoughts

The Statute of Frauds exists to ensure certainty in high-stakes transactions. While equitable remedies like quantum meruitcan help you recover the value of your work or money, they are a safety net, not a solution. They only recover the value provided, not the benefit of the bargain (the profit you expected to make).

For contracts involving real estate, significant debts, or long-term performance, proper documentation is not just a formality, it is a legal necessity.

If you have any questions about this article or would like to discuss your own case, please give me a call today or schedule a consultation. You can also refer to my civil litigation page for more information.

Disclaimer: This article provides a general overview of Alabama property law and does not constitute legal advice or create an attorney-client relationship. You should consult an attorney regarding your specific legal situation.