CHAPTER 14 STATUTE OF FRAUDS WRITING REQUIREMENT Learning

CHAPTER 14 STATUTE OF FRAUDS – WRITING REQUIREMENT

Learning Objectives • What contracts must be in writing to be enforceable? • If it is possible for a contract to be performed within one year, must it be in writing? • When will an oral promise to pay another person’s debt be enforced? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2

Learning Objectives • If a written contract is required, what terms are considered essential and must be contained in the written document? • What is parol evidence? When is it admissible to clarify the terms of a written contract? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3

Requirement of a Writing • 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. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4

Requirement of a Writing • The following types of contracts must be in writing and signed (cont’d): – Promise Made in Consideration of Marriage. – Contracts for the Sale of Goods priced at $500 or more. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5

Requirement of a Writing • Contracts Involving Interests in Land. – All contracts for the transfer of any interest in land: mortgages and leases. – CASE 14. 1 Salim v. Solaiman (2010). Do you agree that lack of an adequate property description can make the contract unenforceable? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6

Requirement of a Writing • The One Year Rule. – A contract that cannot, by its own terms, be performed within one year from the date it was formed. – One-year period begins to run the day after the contract is made. – • Test: Whether performance is possible (although unlikely) within one year. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7

Exhibit 14. 1 One Year Rule © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8

Requirement of a Writing • Collateral Promises. – Primary v. Secondary Obligations. • Primary obligation does not need to be in writing. • Secondary obligation must be in writing to be enforceable. – Exception--“Main Purpose Rule”. • Oral contract is enforceable if main purpose is benefit to guarantor. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9

Requirement of a Writing • Promises Made in Consideration of Marriage. – Unilateral promise to make monetary payment or gift in consideration of a promise to marry must be in writing. – Same applies to prenuptial agreements. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10

Requirement of a Writing • Contracts for the Sale of Goods. – UCC requires a writing or memorandum for the sale of goods priced at $500 or more. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11

Requirement of a Writing • Exceptions to the Statute of Frauds. – Partial Performance: court will grant specific performance if partially performed. – Admissions. – Promissory Estoppel. – Special Exceptions under the UCC (oral contracts between merchants Ch. 18). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12

Ex. 14 -2 Contracts Subject to the Statute of Frauds © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13

Sufficiency of the Writing • Statute of Frauds requires a ‘Written Memorandum’ (written or electronic) signed by the party against whom enforcement is sought. • What Constitutes a Writing? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14

Sufficiency of the Writing • What Must Be Contained in the Writing? – The essential terms: quantity, signed by party to be charged, names of parties, subject matter, consideration. Sales of land must state the price and description with sufficient clarity. – Faxed memo sufficient if it shows a meeting of the minds. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15

The Parol Evidence Rule • Oral representations or promises made prior to the contract’s formation or at the time the contract was created, may not be admitted in court. • Exceptions. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16

The Parol Evidence Rule • Exceptions: – Contracts subsequently modified. – Voidable or Void contracts. – Contracts containing ambiguous terms. – Incomplete Contracts. – Prior dealing, course of performance, or usage of trade. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17

The Parol Evidence Rule • Exceptions (cont’d): – Contracts subject to orally agreed-on conditions precedent. – Contracts with an obvious or gross clerical error. – CASE 14. 2 Watkins v. Schexnider (2010). If you were the judge, would you have admitted the evidence? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18

Ex. 14 -3 The Parol Evidence Rule • What is an “Integrated Contract”? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19