Chapter 14 Contracts Statute of Frauds 2004 West

Chapter 14 Contracts: Statute of Frauds © 2004 West Legal Studies in Business A Division of Thomson Learning 1

§ 1: Origins of the Statute of Frauds ü 1677 England passed the law “An Act for the Prevention of Frauds and Abuses. ” üCertain types of contracts must be in writing and signed by the party against whom enforcement is sought to be enforceable. üToday, almost every state has a Statute of Frauds. © 2004 West Legal Studies in Business A Division of Thomson Learning 2

§ 2: The Statute of Frauds ü To be enforceable, the following types of contracts must be in writing and signed: § § § Contracts involving interest in land. Contracts involving “One-Year Rule. ” Collateral or Secondary Contracts. Promise made in consideration of marriage. Contracts for the sale of goods priced at $500 or more. © 2004 West Legal Studies in Business A Division of Thomson Learning 3

Contracts Involving Interests in Land üLand includes all physical objects that are permanently attached to the soil: buildings, fences, trees, and the soil itself. üAll contracts for the transfer of other interest in land: mortgages and leases. üCase 14. 1: Michel v. Bush (2001). © 2004 West Legal Studies in Business A Division of Thomson Learning 4

The One-Year Rule üA contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable. üOne-year period begins to run the day after the contract is made. § Test: Whether performance is possible (although unlikely) within one year. © 2004 West Legal Studies in Business A Division of Thomson Learning 5

Collateral Promises üPrimary v. Secondary Obligations. ü“Main Purpose Rule” Exception. üEstate Debts. © 2004 West Legal Studies in Business A Division of Thomson Learning 6

Promises Made in Consideration of Marriage üPrenuptial agreements must be in writing and signed to be enforceable. üContracts must be supported by some consideration to be enforceable. üPrenuptial agreements may not be enforceable if the agreement is not voluntary. © 2004 West Legal Studies in Business A Division of Thomson Learning 7

Contracts for the Sale of Goods üUCC requires a writing or memorandum for the sale of goods priced at $500 or more. Exceptions: § Partial Performance. • Case 14. 2: Spears v. Warr (2002). § Admissions. § Promissory Estoppel. § Special Exceptions under the UCC. © 2004 West Legal Studies in Business A Division of Thomson Learning 8

§ 3: Sufficiency of the Writing üUnder the Statue of Frauds. § Must name, identify subject matter, consideration, other essential terms, and must be signed by the party against whom enforcement is sought. üUnder the UCC. § Need only name the quantity term and be signed by the party to be charged. üCase 14. 3: Interstate Litho Corp. v. Brown (2001). © 2004 West Legal Studies in Business A Division of Thomson Learning 9

§ 4: Parol Evidence Rule üOral representations or promises made prior to the contract’s formation or at the time the contract was created, may not be admitted in court. üIntegrated Contracts. © 2004 West Legal Studies in Business A Division of Thomson Learning 10

Exceptions to the Parol Evidence Rule üContracts subsequently modified. üVoidable or Void contracts. üContracts containing ambiguous terms. üPrior dealing, course of performance, or usage of trade. © 2004 West Legal Studies in Business A Division of Thomson Learning 11

Exceptions to the Parol Evidence Rule [2] üContracts subject to orally agreed-on conditions. üContracts with an obvious or gross clerical error that clearly would not represent the agreement of the parties. üCase 14. 4: Cousins Sub Systems v. Mc. Kinney (1999). © 2004 West Legal Studies in Business A Division of Thomson Learning 12

Law on the Web üUCC 2 -201 on the Statute of Frauds. üCase Involving Emails and the Statute of Frauds. üHistory of The Statute of Frauds. üLegal Research Exercises on the Web. © 2004 West Legal Studies in Business A Division of Thomson Learning 13