chapter 15 contracts: statute of frauds— writing requirement copyright © 2009 south-western legal...
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Chapter 15 Chapter 15 Contracts: Statute of Frauds—Contracts: Statute of Frauds—
Writing RequirementWriting Requirement Copyright © 2009 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
Jentz Miller Cross
BUSINESS LAW BUSINESS LAW Alternate Edition 11Alternate Edition 11ththEd.Ed.
Copyright © 2009 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
2
§1: Origins of the §1: Origins of the Statute of FraudsStatute of Frauds
1677 England passed the law “An Act for 1677 England passed the law “An Act for the Prevention of Frauds and Abuses.”the Prevention of Frauds and Abuses.”
Certain types of contracts must be in Certain types of contracts must be in writing and signed by the party against writing and signed by the party against whom enforcement is sought to be whom enforcement is sought to be enforceable.enforceable.
Today, almost every state has a Statute of Today, almost every state has a Statute of Frauds.Frauds.
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§2:§2: Contracts That Fall Contracts That Fall within within
The Statute of FraudsThe Statute of Frauds To be enforceable, the following types of To be enforceable, the following types of
contracts must be in writing and signed: contracts must be in writing and signed: – Contracts involving interest in land.Contracts involving interest in land.– Contracts involving “One-Year Rule.”Contracts involving “One-Year Rule.”– Collateral or Secondary Contracts.Collateral or Secondary Contracts.– Promise made in consideration of marriage.Promise made in consideration of marriage.– Contracts for the sale of goods priced at $500 Contracts for the sale of goods priced at $500
or more.or more.
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Contracts Involving Contracts Involving Interests in LandInterests in Land
Land includes all physical objects that are Land includes all physical objects that are permanently attached to the soil: buildings, permanently attached to the soil: buildings, fences, trees, and the soil itself.fences, trees, and the soil itself.
All contracts for the transfer of other All contracts for the transfer of other interest in land: mortgages and leases.interest in land: mortgages and leases.
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The One-Year RuleThe One-Year Rule
A contract that A contract that cannotcannot, by its own terms, , by its own terms, be performed within one year from the be performed within one year from the date it was formed must be in writing to date it was formed must be in writing to be enforceable.be enforceable.
One-year period begins to run the day One-year period begins to run the day after the contract is made.after the contract is made.– Test: Whether performance is possible Test: Whether performance is possible
(although unlikely) within one year. (although unlikely) within one year.– CASE 15.1 CASE 15.1 Sawyer v. MillsSawyer v. Mills (2007). (2007).
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Exhibit 15. 1 One Year Exhibit 15. 1 One Year RuleRule
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Collateral PromisesCollateral Promises
Primary v. Secondary Obligations.Primary v. Secondary Obligations. ““Main Purpose Rule” Exception.Main Purpose Rule” Exception.
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Promises Made in Promises Made in Consideration of MarriageConsideration of Marriage
Prenuptial agreements must be in writing Prenuptial agreements must be in writing and signed to be enforceable.and signed to be enforceable.
Contracts must be supported by some Contracts must be supported by some consideration to be enforceable.consideration to be enforceable.
Prenuptial agreements may not be Prenuptial agreements may not be enforceable if the agreement is not enforceable if the agreement is not voluntary.voluntary.
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Contracts for the Sale of Contracts for the Sale of GoodsGoods
UCC requires a writing or memorandum UCC requires a writing or memorandum for the sale of goods priced at $500 or for the sale of goods priced at $500 or more. more.
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ExceptionsExceptions
ExceptionsExceptions of Applicability of the Statute of of Applicability of the Statute of Frauds:Frauds:– Partial Performance. Partial Performance. CASE 15.2 CASE 15.2 School-School-
Link Technologies, Inc. v. Applied Resources, Link Technologies, Inc. v. Applied Resources, Inc.Inc. (2007). (2007).
– Admissions.Admissions.– Promissory Estoppel.Promissory Estoppel.– Special Exceptions under the UCC.Special Exceptions under the UCC.
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§3: §3: Sufficiency of the Sufficiency of the WritingWriting
Under the Statue of Frauds.Under the Statue of Frauds.– Must name, identify subject matter, Must name, identify subject matter,
consideration, other essential terms, and must consideration, other essential terms, and must be signed by the the party against whom be signed by the the party against whom enforcement is sought.enforcement is sought.
Under the UCC.Under the UCC.– Need only name the quantity term and be Need only name the quantity term and be
signed by the party to be charged.signed by the party to be charged.
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§4: The §4: The Parol Evidence Parol Evidence RuleRule
Oral representations or promises made Oral representations or promises made prior to the contract’s formation or at the prior to the contract’s formation or at the time the contract was created, may not be time the contract was created, may not be admitted in court.admitted in court.
Integrated Contracts.Integrated Contracts. Case 15.3 Case 15.3 Yocca v. Pittsburgh Steelers Yocca v. Pittsburgh Steelers
Sports, Inc.Sports, Inc. (2004). (2004).
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Contracts subsequently modified.Contracts subsequently modified.
Voidable or Void contracts.Voidable or Void contracts.
Contracts containing ambiguous Contracts containing ambiguous terms.terms.
Prior dealing, course of Prior dealing, course of performance, or usage of trade.performance, or usage of trade.
Exceptions to Exceptions to the Parol Evidence Rulethe Parol Evidence Rule
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Exceptions to Exceptions to the Parol Evidence Rulethe Parol Evidence Rule
Contracts subject to orally agreed-on Contracts subject to orally agreed-on conditions.conditions.
Contracts with an obvious or gross clerical Contracts with an obvious or gross clerical error that clearly would not represent the error that clearly would not represent the agreement of the parties. agreement of the parties.
KEY:KEY: Is this an “integrated contract”? Is this an “integrated contract”?
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§5: The Statute of Frauds §5: The Statute of Frauds in the International in the International
ContextContext CISG governs sales contracts.CISG governs sales contracts. Article 11 does not incorporate statute of Article 11 does not incorporate statute of
frauds provisions.frauds provisions. Relies on legal customs.Relies on legal customs.