Chapter 13: Statute of Frauds and Third-Party Contracts

Statute of Frauds

A rule of state law that requires certain types of contracts to be in writing in order to be enforceable

Purpose of Statute of Frauds

To require sufficient, reliable evidence; prevent unreliable oral evidence; prevent parties from entering unagreeable contracts

Marriage Agreements

Promise to give someone money, property, or something of material value in exchange for getting married must be in writing

Prenuptial Agreement (Prenup)

Legal written contract created by two people before they get married to establish and manage financial matters

Year

Contract must be in writing if it is impossible to complete within one year of the date the contract is made

Employment for Life

Agreement to employ someone for life doesn’t have to be in writing because person can die in the next 12 months

Land

Any contracts transferring interest in land must be in writing

Executor of estate paying with own funds

Executor (person managing deceased person’s estate) promises to pay dead person’s debt must be in writing

UCC 2-201: Sale of goods

Under UCC, buying/selling goods $500 or more must be in writing

Suretyship

cosigner/guarantor promising creditor of paying debt if the other person doesn’t must be in writing, except if it benefits cosigner

Equal dignities rule

If an agent is authorized to enter into a contract on someone else’s behalf for a contract that must be in writing, the agent’s authorization must also be in writing

Exceptions to statute of frauds

Admission, partial performance, promissory estoppel, oral contracts between merchants and the UCC

Admission

Statement made in court, under oath, of an existing oral contract

Partial performance

Performance of part of an unwritten agreement constitutes proof of oral contract

Promissory Estoppel

When someone reasonably relies on a promise, even though the agreement wasn’t put in writing, can be enforced because if not would cause injustice

Oral contracts between merchants and the UCC

Once production of custom good has begun, doesn’t need to be in writting

Required elements for a writing to satisfy the Statue of Frauds

parties to contract, subject matter/purpose of agreement, consideration, significant terms, signature of party plaintiff seeks to hold responsible under contract.

Common law requirements for Statute of Frauds

memorandum, written document, compilation of several written documents

UCC Requirements for Statute of Frauds

quantity, written form, signature by party, doesn’t need to include every contract term such as price/delivery date

Parol Evidence Rule

Common law rule stating that oral evidence of agreement made before or with a written agreement is inadmissible (not accepted) when parties intended to have the written agreement be the complete and final version

8 Exceptions to Parol Evidence

1. Subsequent modifications, 2. oral conditions, 3. part written, part oral, 4. ambiguous terms, 5. incomplete contracts, 6. typographical errors, 7. voidable or void contracts 8. UCC: prior dealings and usage of trade