Introductory Business Law CLEP Prep Practice Exam

What is a statute of frauds?

1. A requirement that certain contracts be in writing

2. An agreement between two or more parties

3. A set of rules that protect consumers

4. A requirement that all contracts be in writing

The correct answer is: A requirement that certain contracts be in writing

The term "statute of frauds" refers to a law or legal principle that requires certain types of contracts to be in writing in order to be considered valid or enforceable. This typically applies to high-value or important contracts, such as real estate transactions or contracts that cannot be completed within a year. Option B is incorrect because an agreement between two or more parties does not necessarily have to be in writing to be valid. Option C is incorrect because a statute of frauds is focused on contracts, not consumer protection. Option D is incorrect because not all contracts are subject to the statute of frauds, only specific types as determined by the law.