Which legal principle requires certain contracts to be in writing and signed to be enforceable?

• A. PITI
• B. Statute of Frauds
• C. Insurance provisions
• D. Escrow

Answer: (B)

Statute of Frauds is the rule that certain agreements must be in writing and signed to be enforceable. This protects against relying on vague or unprovable promises, especially in important transactions. For example, deals involving real estate must be in writing and signed, and contracts that cannot be completed within one year also must be in writing. In some cases, other types of contracts, such as surety arrangements or certain sales of goods above a threshold, fall under this requirement as well. When these contracts aren’t written, they typically cannot be enforced in court, even if there was a verbal agreement.

PITI is a mortgage payment breakdown (principal, interest, taxes, and insurance). Insurance provisions are terms within a policy, not a general rule about enforceability. Escrow refers to holding funds or documents by a third party until conditions are met. These relate to how a transaction is financed or managed, not to the enforceability requirement that some contracts must be in writing.