Academic journal article The Review of Litigation

When Actions Speak Louder Than Words: The Case for a Quasi-Estopped Exception to the Statute of Frauds

Academic journal article The Review of Litigation

When Actions Speak Louder Than Words: The Case for a Quasi-Estopped Exception to the Statute of Frauds

Article excerpt

I. INTRODUCTION: EQUITY SPEAKS SOFTLY AND WINS IN THE END.1

Good advice for the congenial entrepreneur or consultant is to "get it in writing." Although many in society stand by their word and are willing to operate on handshakes or verbal promises, dishonesty abounds. While oral contracts are often valid, legislatures have enacted statutes-commonly known as "statutes of frauds"-that require certain types of contracts to be in writing and signed to be enforceable. This is the law in Texas.2

However, "[i]t would be a narrow conception of jurisprudence to confine the notion of 'laws' to what is found written on the statute books."3 Because statutes of frauds themselves may be instruments of fraud, judicially created exceptions to these statutes, lodged in equity, thrive. Texas courts have recognized circumstances where equity should, and does, uphold the validity of a contract despite the lack of a writing, even when a writing appears to be required by statute. One common thread runs through these judicial exceptions: action. Courts act to prevent injustice when the parties' actions evidence the existence of a contract despite the absence of a writing. Put differently, sometimes actions speak louder than words.

This Article examines the Texas law pertaining to the statute of frauds and makes the case for a quasi-estoppel exception to the statute of frauds. Part II examines the law of quasi-estoppel and the statute of frauds. After the purpose and reasoning behind the statute of frauds has been addressed, Part III looks at the two Texas appellate opinions that indirectly support a quasi-estoppel exception to the statute of frauds. Because neither case is a straightforward endorsement of a quasi-estoppel exception to the statute of frauds, Part IV explores three parallel exceptions to the statute that have been recognized by Texas courts. Concluding that a solid argument exists for the extension of the law to recognize a quasi-estoppel exception to the statute of frauds, Part V accordingly provides the practicing litigator with suggestions: pointers on pleading a quasi-- estoppel exception to the statute of frauds, guidance for understanding the burden of proof, and proposed arguments concerning the question of whether the determination of the fulfillment of the exception should be for the judge or the jury.

When an otherwise gregarious client sits in your office expounding regret over not having "gotten it in writing," depending on the circumstances, all may not be lost. While there is no substitute in law for a signed, written contract, in equity the action of the parties just may do. Actions sometimes speak louder than words. Quasi-estoppel may prevent the statute of frauds from nullifying the client's handshake deal.

II. QUASI-ESTOPPEL AND THE STATUTE OF FRAUDS

Quasi-estoppel is a species of estoppel4 created by equity5 that acts as an affirmative defense6 and, by its assertion, may prevent injustice.7 According to Black's Law Dictionary:

"Estoppel" means that party is prevented by his own acts from claiming a right to detriment of other party who was entitled to rely on such conduct and has acted accordingly. A principal that provides that an individual is barred from denying or alleging a certain fact or state facts [sic] because of that individual's previous conduct, allegation, or denial. A doctrine which holds that an inconsistent position, attitude or course of conduct may not be adopted to loss or injury of another.8

Quasi-estoppel, as the word "quasi" indicates,9 resembles estoppel but bears a material difference: it requires less proof. While other forms of estoppel require proof of a false representation and proof of detrimental reliance on that false representation, 10 quasi-- estoppel does not.11 It could as easily be called "estoppel light."

Quasi-estoppel precludes a party from asserting, to another's disadvantage, a right that is inconsistent with a position previously taken. …

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