Ch.10 The Requirements of Form and Writing

Question 1

Two general classes of contracts:

Answer 1

1. Formal (derives its validity from its form) - not common
   - Sometimes referred to as a covenant
2. Informal (simple) - most common
   - Implied
   - Oral
   - Written

Question 2

Power of attorney

Answer 2

a legal document usually signed under seal in which a person appoints another to act as his or her attorney to carry out the contractual or legal acts specified in the document
- Formal contract

Question 3

Governments have passed legislation to regulate electronic signatures

Answer 3

Considered valid signature to form a contract

Question 4

Electronic signature:

Answer 4

Consists of one or more letters, characters, numbers or other symbols in digital form incorporated in, attached to or associated with an electronic document

Must be in sole control of person making signature

Security measures required

Question 5

Statute of Frauds

Answer 5

imposed requirements of writing for certain informal contracts

• Still exists in some provinces, in others it has been repealed but incorporated into other statutes

Question 6

Certain contracts not enforceable if not in writing (i.e. contracts covered by Statute of Frauds):

Answer 6

1. Contract concerning interest in land
2. Promise by executor to settle estate claim
3. A guarantee agreement
4. Contract that cannot be performed within one year

Question 7

Land contracts

Answer 7

contracts concerning sale or disposition of interests in land

• Vague concept
• Includes sale of land or lease of land
• Does not include those things ancillary to the land or remote (repairs, renovations, etc.)
• Does not include room and board contracts

Question 8

Guarantee

Answer 8

collateral promise (in writing) to answer or the debt of another (the principal debtor) if the debtor should default in payment

Question 9

Three parties in a guarantee:

Answer 9

• Principal debtor
• Creditor (primary liability)
• Guarantor (secondary liability) – provides promise of payment in form of contingent liability

Question 10

Assumed Liability: Tort

Any agreement whereby a third party promises to answer for the tort of another

Answer 10

Must be in writing

Signed by the party to be charged

Similar to guarantee except third party promises to compensate a person injured by tortious act, not for failure to pay debt

Question 11

Requirements for a Written Memorandum

To comply with Statute of Frauds:

Answer 11

Need not be in a formal document

Must include terms of contract (3 P’s):
- Parties to agreement be identified by name or description
- Property described in detail
- Price – consideration paid, or to be paid

Must be signed by the party against whom it is being enforced

Question 12

Parol Evidence Rule

Answer 12

Rule that prevents a party from introducing evidence that would add to or contradict terms of a contract
-Limits the kinds of evidence that may be used to prove terms of a contract
- Cannot change or contradict the terms of a clear and unambiguous contract

Question 13

Condition precedent

Answer 13

condition that must be satisfied before a contract may come into effect

-First exception to the parol evidence rule
-Contract is in a state of suspension until the condition is satisfied
-If the condition is not met, then the contract is cancelled

Question 14

Implied term

Answer 14

insertion by the court of a standard or customary term omitted by the parties when the contract was prepared

• Second exception to the parol evidence rule
• If evidence establishes that parties intended to put contract term in (and it is normally included), courts may conclude the term is an implied term
  Cannot conflict with express terms

Question 15

Subsequent agreement

Answer 15

agreement made after a written agreement that alters or cancels the written agreement

Question 16

Verbal or written negotiations with view to making formal contract

Answer 16

• Issue of when a contract agreed to orally becomes enforceable if it is never reduced to writing
• Issue of interim enforceability between time of oral agreement and being put into writing

Question 17

Sale of Goods Act

Answer 17

Sale of Goods Act is a second important statute with requirement of writing

• Certain transactions over a certain value if not in writing are unenforceable
• Methods of enforcement without written memo (to bind the bargain):
  – Payment of a deposit
  – Acceptance of delivery of part of the goods
  – Giving of something “in earnest” (such as a trade-in)