Section 4 Statute of Frauds is alive and well

Actionstrength v International Glass Engineering InGIEn SpA and another (H of L TLR 4 April)

Section 4 of the Statute of Fraud had been enacted in 1677 to address a mischief facilitated, it seemed, by the procedural deficiencies of the day: the calling of perjured evidence to prove spurious agreements said to have been made orally. The solution applied to the five classes of contract specified in s4 was to require, as a condition of enforceability, some written memorandum or note of the agreement signed by the party to be charged under the agreement or his authorised agent. It quickly became evident that if the 17th-century solution addressed one mischief, it was capable of giving rise to another: that a party, making and acting on what was thought to be a binding oral agreement, would find his commercial expectations defeated when the time for enforcement came and the other party successfully relied on the lack of a written memorandum or note of the agreement. While s4 had been repealed, or replaced, in its application to the other four classes of contract originally specified, it had been retained in relation to guarantees. It might be questionable whether, in relation to contracts of guarantee, the mischief at which s4 was originally aimed was not now outweighed, at least in some classes of case, by the mischief to which it could give rise in a case such as the present (however unusual such cases might be), but that was not a question for the House in its judicial capacity. Parliament having chosen to retain the provision in s4 that in the absence of a written note or memorandum a guarantee was unenforceable, a creditor could not claim that the guarantor was estopped from relying on that provision by reason of having encouraged the creditor to act to its prejudice by its promise to pay, since the effect of admitting an estoppel on that ground alone would be to render the provision nugatory.