Bus Law Exam 2

Chapter 10

Statute of Frauds

Law requiring certain contracts to be in writing to be enforceable in order to prevent fraud and misunderstanding.

Oral contract

Agreement made verbally that is generally enforceable unless it falls within the Statute of Frauds.

Written contract

Agreement evidenced by a writing that serves as proof of the parties' intent and terms.

Marriage provision

Contracts made in consideration of marriage must be in writing, but the marriage itself does not.

Prenuptial agreement

Contract made before marriage that must be in writing under the Statute of Frauds.

One-year rule

A contract must be in writing if it cannot possibly be performed within one year from the date it is made.

Capable of performance within one year test

If a contract could possibly be performed within one year, it does not need to be in writing.

Full performance exception

If one party fully performs, the contract may be enforceable even if it should have been in writing.

Interest in land

Contracts involving the sale, transfer, mortgage, option, or lease longer than one year of land must be in writing.

Sale of land

Agreement to transfer ownership of real property that must be in writing.

Lease longer than one year

Lease of real estate for more than one year that must be in writing.

Option to buy land

Contract giving a right to purchase land that must be in writing.

Part performance exception

Oral land contract may be enforced if there is payment plus possession and/or improvements.

Full performance of land contract

If the property is transferred, the writing requirement is no longer relevant.

Collateral promise

Promise to answer for the debt of another that must be in writing.

Surety

Person who agrees to be secondarily liable if the debtor fails to pay.

Guarantor

Person who promises to pay a debt if the debtor becomes insolvent or defaults.

Secondary liability

Liability that arises only if the primary debtor fails to perform.

Main purpose exception

Oral promise to pay another's debt is enforceable if the promisor's main purpose is to benefit themselves economically.

Goods provision (UCC)

Contract for sale of goods $500 or more must be in writing.

Lease of goods rule

Lease of goods $1,000 or more must be in writing.

Specially manufactured goods exception

Oral contract enforceable if goods are custom-made and production has begun.

Admission exception

Oral contract enforceable to the extent a party admits the contract existed.

Partial admission rule

Contract enforceable only up to the amount admitted.

Payment or acceptance exception

Oral goods contract enforceable to the extent goods are received or payment accepted.

Promise to pay discharged debt

Promise to pay debt previously discharged by statute of limitations or bankruptcy may require writing.

Services related to sale of real estate

Agreements such as broker commissions may need to be in writing.

At-will employment

Usually does not fall under the one-year rule because it can end anytime.

Agreement for life

Contract may be oral because performance could end within one year.

Estimated duration rule

If performance is only expected to take over one year but could finish sooner, writing is not required.

Writing

Any record showing the parties' agreement, including email, notes, or multiple documents.

Electronic writing

Digital record that can satisfy the writing requirement.

Incorporation by reference

Including other documents as part of a contract by referring to them.

Party to be charged

The party against whom enforcement is sought must sign the writing.

Signature requirement

Writing must be signed by the party to be charged.

Uniform Electronic Transactions Act (UETA)

Law recognizing electronic signatures and records as legally valid.

Electronic signature

Electronic symbol or process showing intent to sign.

Common law writing requirements

Writing must include parties, subject matter, essential terms, consideration, and signature.

UCC writing requirements

Writing must include quantity and signature.

Essential terms

Important deal terms required for enforceability.

Quantity term

Required term under UCC writing rule.

Statute of Frauds effect

Contract may be valid but unenforceable if writing requirement is not met.

Statute of Frauds defense

Argument that contract cannot be enforced because writing is missing.

Restitution

Recovery of benefits given when contract is unenforceable.

Parol evidence rule

Rule preventing prior oral or written statements from changing a final written contract.

Integrated agreement

Writing intended as the final expression of the parties' agreement.

Fully integrated agreement

Writing intended to be the complete and final agreement.

Four corners rule

Court looks only at the written contract itself.

Merger clause

Clause stating the writing is the complete agreement.

Prior oral agreement

Earlier statement that cannot change a final written contract.

Subsequent modification

Later change to contract allowed despite parol evidence rule.

Parol evidence exceptions

Evidence allowed for later changes, mistake, fraud, lack of formation, ambiguity, or clerical error.

Ambiguity evidence

Evidence used to explain unclear terms.

Clerical error

Obvious mistake in writing that can be corrected.

Contract interpretation

Process by which a court determines the meaning of contract language.

Plain meaning rule

Words given ordinary meaning unless context shows otherwise.

Course of performance

How the parties acted under the contract.

Trade usage

Industry custom used to interpret terms.

Specific over general rule

Specific terms control over general terms.

Title

Heading identifying the contract.

Preamble

Intro identifying parties, date, and subject.

Recitals

Background statements describing the agreement.

Body of agreement

Main terms and obligations.

Definitions section

Section defining key terms.

Signatures

Section showing assent.

Appendix / annex

Attached documents.

Amendment

Later written change.

Term

Length of the contract.

Termination

How contract ends.

Renewal

Extension of contract.

Evergreen clause

Automatic renewal clause.

Modification clause

Explains how contract may be changed.

Assignment

Transfer of rights or duties.

Indemnification

Promise to protect against loss.

Audit clause

Allows review of records.

Choice of law

Which law applies.

Forum / venue clause

Where disputes are resolved.

Dispute resolution clause

How disputes are handled.

Limitation of liability

Limits damages.

Insurance clause

Requires insurance.

Severability

Invalid term does not void entire contract.

Waiver

Giving up a right.

Contract analysis order

Formation → Form → Defenses → Performance/Breach → Remedies.