BMGT380 - Chapter 16: Writing

contracts within statute of frauds

• “Within” statute if statute requires that sort of contract to be evidenced by a writing 

• Following types included in statute: 

  • Collateral contracts in which a person promises to perform the obligation of another person 

  • Contracts for the sale of an interest in real estate 

  • Bilateral contracts that cannot be performed within a year from the date of their formation 

  • Contracts for the sale of goods for a price of $500 or more 

  • Contracts in which an executor or administrator promises to be personally liable for the debt of an estate 

  • Contracts in which marriage is the consideration

collateral contract

in which one person (guarantor) agrees to pay the debt or obligation that a second person (the principal debtor) owes to a third person (the obligee) if the principal debtor fails to perform

-unenforceable unless evidenced by a writing

-Involves at least 3 parties and at least 2 promises to perform 

original obligation

when a person undertakes an obligation that is not conditioned on the default of another person and the debt is his own rather than that of another person

exception to leading object rule (“main purpose rule”)

• No writing required where guarantor makes a collateral promise for the main purpose of obtaining some presonal economic advantage

full performance by vendor

exception to collateral contract:

An oral contract for the sale of land that has been completely performed by the vendor (seller) is “taken out of the statute of frauds”--that is, is enforceable without a writing

part performance doctrine

When the vendee (purchaser of land) acts in clear reliance on an oral contract for the sale of land, permits the vendee to enforce the contract notwithstanding the fact that it was oral

enforceable transfer of interest in land

• enforced even without writing when person seeking enforcement: 

  • Has reasonably relied on the contract and on the other party’s assent 

  • Has changed his position to such an extent that enforcement of the contract is the only way to prevent injustice 

specific performance

remedy whereby the court orders the breaching party to perform his contract

one year performance

bilateral, executory contracts that cannot be performed within one year from existence is within statute of frauds and must be in writing

not included in statute of frauds (time)

-contract for indefinite period of time

-contract “for life” because is possible for contract tobe performed within year

UCC statute of frauds

contract for sale of goods for price $500 or more not enforceable without writing or other specified evidence that contract was made

executor

• If the person dies leaving a will or an adminstrator if the person dies without a will, is to pay the debts owed by decedent 

• No writing required when executor promises to pay the decedent’s debts from the funds of the decedent’s estate 

• If executor acts in own capacity as private individual rather than representative, promises to pay one of the decedent’s debts out of the executors funds DOES require writing

statute of frauds writing requirement

• Requires memorandum of parties’ agreement - do not require entire contract be in writing 

  • Must provide written evidence that a contract was made, but need not have been created with the intent that memorandum itself would be binding

contents of memorandum

• Essential terms of contract indicated 

• Identity of parties 

• Subject matter of contract

UCC memorandum contents

• Writing must be sufficient to indicate contract for sale has been made between parties - even if omits or incorrectly states term agreed on 

• Not enforceable for more than quantity of goods stated in memorandum 

• Writing must indicate quantity of goods to be sold

signature requirement

• Memorandum must be signed by party to be charged or authorized agent 

• May appear anywhere on memorandum - writing, mark, initials, engraving, e-signature, other symbol 

• Party to be charged intended it to authenticate the writing

promissory estoppel

when one of the parties would suffer serious losses because of her reliance on an oral contract, the other party is estopped from raising the statute of frauds as a defense

parol evidence rule

written or spoken statements that are not contained in the written contract - when parties enter into a written contract that they intend as a complete integration, a court will not permit the use of evidence of prior or contemporaneous statements to add to, alter, or contradict the terms of the written contract

-confine the parties’ contract to the terms of the written agreement

admissible parol evidence

1) Additional terms in partially integrated contracts 

2) Explaining ambiguities 

3) Circumstances invalidating contract

4) Existence of condition 

5) Subsequent Agreements

partially integrated

one that expresses the parties’ final agreement as to some but not all of the terms of their contract

merger clause (integration clause)

provide that the written contract is the complete integration of the parties’ agreement